comparative evaluation of unexplained wealth orders - national

Comparati

ve Evaluation of Unexplained Wealth Ordeers

Comparative Evaluation of Unexplained Wealth Orders

Contents

I. EXECUTIVE SUMMARY ............................................................................................................ 1

II. INTRODUCTION ........................................................................................................................ 4

2.1 Purpose of the Report............................................................................................................. 4

2.2 Scope of Work and Methodology .......................................................................................... 5

III. FINDINGS ................................................................................................................................... 9

BACKGROUND ON ASSET FORFEITURE .............................................................................................. 9

3.1. REVIEW OF ASSET FORFEITURE AND CONFISCATION SYSTEM ............................. 12

3.1.1 Countries that implemented UWOs and apply them to all offenses and reverse the burden of proof ........................................................................................... 12

Colombia .................................................................................................................................... 12

3.1.2 Countries with non-conviction based asset forfeiture laws that apply to all offenses with a presumption in favor of forfeiture ....................................................... 16

Antigua and Barbuda ................................................................................................................. 16

Canada ....................................................................................................................................... 20

New Zealand .............................................................................................................................. 32

South Africa ............................................................................................................................... 35

United Kingdom......................................................................................................................... 41

3.1.3 Countries that have some form of unexplained wealth provisions that apply to all offenses, providing for reversal of the burden of proof in a criminal proceeding ...................................................................................................... 46

Austria ....................................................................................................................................... 46

France ....................................................................................................................................... 48

Italy ....................................................................................................................................... 50

Netherlands ................................................................................................................................ 53

Switzerland ................................................................................................................................ 56

3.1.4 Countries that have illicit enrichment targeting PEPs, reversing the burden of proof to the defendant in a criminal proceeding ........................................... 58

Hong Kong ................................................................................................................................. 58

Singapore ................................................................................................................................... 62

3.2 COMPREHENSIVE ANALYSIS OF THE UWO IN TWO SELECTED COUNTRIES ............................... 65

3.2.1 AUSTRALIA ............................................................................................................................ 67


The History of UWOs in Australia ............................................................................................ 67

3.2.1.2 WESTERN AUSTRALIA (WA) ............................................................................................... 71

The History of UWOs in Western Australia .............................................................................. 71

Criminal Property Confiscation Act (CPCA) ............................................................................ 72

Proceedings under UWOs (Freezing Orders) ............................................................................ 74

Proceedings Under UWOs (Forfeiture Orders) ......................................................................... 77

Proceedings under Criminal Benefits ........................................................................................ 79

Substitution of Crime-used property in Criminal Benefits ........................................................ 80

Recovery and Release of Confiscable Property in Unexplained Wealth Orders and Criminal Benefits .................................................................................................. 81

Investigation and Search ............................................................................................................ 81

Management of Seized, Frozen, and Confiscated Property ....................................................... 82

3.2.1.3 AUSTRALIA COMMONWEALTH (SERIOUS AND ORGANIZED CRIME ACT 2010) ................... 83

Background ................................................................................................................................ 83

Proceeds of Crime Act 2002 ...................................................................................................... 83

Proceedings under Unexplained Wealth Orders ........................................................................ 84

Proceedings under Convictions for Indictable Offenses ............................................................ 88

Civil Proceeding Forfeiture (In Rem Forfeiture) ....................................................................... 89

Proceedings related to people suspected of committing Serious Offense ................................. 90

Proceedings under Literary Proceeds Orders ............................................................................. 91

Investigation and Search ............................................................................................................ 91

Management of Seized Property ................................................................................................ 92

3.2.1.4 NORTHERN TERRITORY –CRIMINAL PROPERTY CONFISCATION ACT 2003 ......................... 94

Background ................................................................................................................................ 94

Criminal Property Forfeiture Act ............................................................................................... 94

Proceedings under Unexplained Wealth Orders ........................................................................ 94

Criminal Benefit Declaration ..................................................................................................... 95

Management of Seized Property ................................................................................................ 97

3.2.1.5 NEW SOUTH WALES—CRIMINAL ASSET RECOVERY ACT 1990 ......................................... 99

Background ................................................................................................................................ 99

Criminal Asset Recovery Act 1990 ........................................................................................... 99

Proceedings under a Proceeds Assessment Order ................................................................... 101

3.2.1.6 EVALUATING THE EFFECTIVENESS OF AUSTRALIA’S UWOS ............................................. 103

Public Debate ........................................................................................................................... 105


Effectiveness of UWO - Commonwealth ................................................................................ 109

Effectiveness of UWOs – Western Australia ........................................................................... 110

Australian Case Law ................................................................................................................ 116

Australia Conclusions .............................................................................................................. 121

3.2.2 IRELAND ............................................................................................................................... 122

Background .............................................................................................................................. 122

Proceeds of Crime Act 1996 .................................................................................................... 125

Proceedings Under PoCA ........................................................................................................ 127

Investigations and Search ........................................................................................................ 131

3.2.2.1 EVALUATING THE EFFECTIVENESS OF IRELAND’S UWOS ................................................. 132

Effectiveness of the Proceeds of Crime Act ............................................................................ 132

Irish Case Law ......................................................................................................................... 142

Ireland Conclusions ................................................................................................................. 148

Conclusions drawn from experience of Ireland and Australia ................................................. 148

IV. REVIEW OF THE U.S. SYSTEM ......................................................................................... 151

4.1 GENERAL OVERVIEW OF ASSET FORFEITURE IN THE U.S. ....................................................... 151

Civil Asset Reform Forfeiture Act ........................................................................................... 154

4.2. TRANSFERABILITY ANALYSIS—IMPLICATIONS OF ADOPTING UWO IN THE

UNITED STATES ................................................................................................................ 156

Reversed Burden of Proof ........................................................................................................ 159

Nexus between an Offense and Property ................................................................................. 162

Equitable Sharing ..................................................................................................................... 163

Other Issues to Be Considered ................................................................................................. 163

Applicability of the lessons learned in Australia and Ireland to the U.S. ................................ 165

APPENDIX A: TABLE OF COUNTRIES WITH UWOs….…………………….. A-1

APPENDIX B: COPIES OF LEGAL STATUTES ………………………………. B-1

APPENDIX C: COPIES OF AFFIDAVITS ……………………………………….C-1

APPENDIX D: NEWSPAPER COVERAGE OF UWO’S ………………………. D-1

APPENDIX E: INTERVIEW PROTOCOL………………………………………. E-1

APPENDIX F: CONTACT LIST OF PEOPLE INTERVIEWED ……………….. F-1

APPENDIX G: LIST OF CRITERIA …………………………………………….. G-1


Executive Summary 1

I. EXECUTIVE SUMMARY Unexplained Wealth Order (UWO) laws, a relatively recent development in confiscation and forfeiture jurisprudence, target the proceeds derived from criminal activities. Like traditional in personam and in rem forfeiture, their primary objective is to deprive criminals from acquiring or benefiting from unlawful activities. However by using UWOs the state does not have to first prove a criminal charge, as is the case with conviction based forfeiture. Likewise, the state does not have to first prove that the property in question is the instrument or proceed of a crime, as is generally the case in in rem asset forfeiture. UWO laws differ from traditional forfeiture laws in another important respect: they shift the burden of proof to the property owner who must prove a legitimate source for his wealth and the forfeiture proceeding is instituted against a person rather than against the property. These seemingly radical features of UWO laws (no proof of the property being connected to a crime and a reversed burden of proof) have, in practice, been tempered by courts, prosecutors and police, but still are a powerful, and controversial, tool for seizing assets where traditional methods likely would have been ineffective.

Several countries have debated the possibility of introducing UWOs into their legal systems, but most have decided to maintain traditional confiscation regime, in personam following conviction, and in rem proceedings targeting property. Few have ventured into the area of UWOs, and some of those that have done so have faced constitutional and legal challenges. For example, in Italy the Constitutional Court declared law 12 quinquies to be unconstitutional after two years of use determining that shifting the burden of proof violates the Italian constitution. Other countries have adopted only some aspects of UWO laws, e.g., United Kingdom, South Africa, some states in Canada, and New Zealand, have a presumption in favor of forfeiture for unlawful activities or specific offenses, but not full UWOs. Other countries have, under the umbrella of the United Nations Convention against Corruption (UNCAC), enacted illicit enrichment offenses targeting the proceeds of corruption where the reversed burden of proof is part of the offense but yet apply only to political officials and not to all crimes and individuals as do UWO laws. A similar approach was followed by France with an amendment to its criminal code which introduced reversed burden of proof forfeiture measures targeting certain specific criminal offenders but it is still a post-conviction method. Only three countries thus far have adopted full UWOs – no proof of the property being connected to a crime and a reversed burden of proof. These are Australia, Colombia, and Ireland.

Under the parameters of this study, two countries were selected for in-depth review. Owing to their shared traits with the U.S.: common law legal systems (the courts of both countries frequently cite U.S. decisions), long established democratic traditions, and a common language, Ireland and Australia were selected. Moreover, Australia was selected as it is the only country in the world that identified these laws explicitly as unexplained wealth.

Ireland has had the most success of any country implementing UWOs. Its Proceeds of Crime Act (PoCA) of 1996 set forth the legislative framework for UWOs (although they are called “POCA Orders” in Ireland they are referred to as “Unexplained Wealth Orders” in this report for consistency). In addition the Irish Criminal Asset Bureau (CAB) Act of 1996 established the institutional framework to support POCA’s implementation. This legislation was the direct product of public outrage over the murder of an investigative journalist and a police detective by drug dealers. To this day there is still strong public support for the laws.

The single factor most important to the success of Ireland’s UWO (PoCA) law is the CAB. By forming an elite, well-resourced unit, with staff from not only police and prosecutors, but also tax and social welfare agencies, Ireland has been able to fully exploit the statute. Members of the CAB retain the powers and duties vested in them by their home agencies and also have the powers of their CAB colleagues, i.e., each is cross-deputized so, e.g., a CAB police agent also has the tax authority of a CAB revenue agent, and a CAB revenue agent has the arrest authority of a CAB police agent. Combining these resources, skills, and experience in one agency enables the CAB to attack the proceeds of crime not only from by way of UWO


Executive Summary 2

forfeitures but also by taxing these and denying social welfare payments to the respondents who own or control such property. Further, the CAB has access to a large database, Police Using Lead System Effectively (PULSE) which contains comprehensive information on all citizens’ criminal, traffic, tax, property, customs, social welfare and consumer credit records. This enables the CAB to gather large and comprehensive amounts of information to compare assets to income and thereby determine whom they should target.

In addition, the Irish High Court appoints a judge, assisted by a special registrar, to work solely on forfeiture cases for a period of at least two years. This provides the CAB with direct and speedy access to the courts and a judge knowledgeable in forfeiture law. The CAB also has been very selective in the cases it pursues choosing only those of the type which garner public support.

The Irish law has had a significant impact on dismantling and disrupting criminal activities. Although anecdotal, it is widely reported by law enforcement officials and in the media1 that during the first five years of its enactment the law has resulted in a significant setback to those engaged in criminal activities targeted. With the frequency of certain crimes dropping, it is assumed that a number of criminal enterprise leaders have relocated to other countries such as Holland.

From 1998 through 2009 (date of the most recent available data), the CAB obtained 110 forfeiture orders under the law totaling approximately US$16M. This figure understates CAB’s effectiveness since it does not include cases in which the CAB decided to use tax laws to seize assets originally investigated under UWO (PoCA). The ability to tax property derived from crime is one of the CAB’s most effective weapons. Since 1998 the CAB has obtained a total of US$160M through this method.

Australia adopted its first UWO law in 2000, four years after Ireland, but its UWO use has not been as widespread as in Ireland. Initiated at the state and territory level, these started in Western Australia (WA) in response to increased drug trafficking and drug-related deaths in the state. The WA UWO law was followed by the Northern Territory (NT) three years later. Victoria, Queensland, and South Australia subsequently adopted comprehensive forfeiture statutes including conviction and non-conviction processes that contain many aspects of UWOs. Only within the past year has a similar law (with some restrictions) been enacted at the federal (Commonwealth) level, and also in the state of New South Wales.

Compared to Ireland, relatively little forfeiture has been achieved via UWOs in Australia. Several factors are responsible for this, including a push-back by the Australian courts, caution on the part of prosecutors to bring actions under these new laws, disagreements between police and prosecutors over how strenuously to use the law, a lack of forensic accounting staff, and strict forfeiture laws for drug crimes that in some cases obviate the need for UWOs. Another factor is that the property owner can meet his evidentiary burden simply by stating that the funds in question were an inheritance or gambling winning. Since in Australia such income does not have to be reported to tax officials, there is no record that prosecutors can use to contradict the respondent’s claim. Consequently, this shifts the burden back to the government, but there is no paper trail evidence that these funds would create in many other countries making it difficult for the government to disprove the property owner’s claims. Another factor in Australia that has stemmed the progress of UWOs is the downward public support most notably as a result of case in which an elderly couple had their house seized after their son was convicted of possessing cannabis concealed in the roof of the home. Finally, and not least among the reasons for the lack of quantifiable success of UWOs in Australia and distinction from Ireland is the absence of a CAB-like agency. There is no centralized effort at the Federal level to coordinate UWO actions in Australia and there is not the cross-agency buy-in or cooperation like that observed in Ireland.

Notwithstanding, a number of forfeitures have been made under Australian UWOs. In Western Australia along there has been 27 UWO applications since enactment of the law in 2000, of which 21 led to forfeiture of assets. Still, it is evident that UWO provisions have not been used extensively in Australia,

1 Interviews with the director of the DPP, former heads of the CAB, and barristers.


Executive Summary 3

and in cases where they have been used only a relatively small amount of funds were recovered totaling only approximately US$6.3M over a period of 10 years. In fact, no UWO applications were brought for a three-year period (2004–2007) following the controversial home seizure case described above.

As the Australian federal government only recently introduced UWOs, no cases have yet been instituted under its provisions. Cognizant of the critical role that the CAB has played in Ireland, the Australian federal government is establishing its own the Criminal Asset Confiscation Task Force, modeled after the Irish CAB. It is expected to begin operations in early 2012.

In both countries, the sweeping nature of the UWO statutes has been tempered in practice. Australian and Irish prosecutors, while only required to meet a burden of probable cause before the burden shifts to the property owner, in practice produce significantly more evidence than one would in a probable cause setting in the U.S., e.g., with a search or arrest warrant, even though the standard of proof is roughly the same. The level of proof that Australian and Irish prosecutors produce in UWO hearings corresponds more closely to our clear and convincing evidence standard. The Irish CAB for instance regularly produces multi-volume books of forensic accounting in support of even small UWO (PoCA) forfeitures.

In terms of the applicability of UWO laws to the U.S., some of the provisions of UWOs would be new to the U.S. while others are not. For instance, U.S. courts have long upheld as constitutional a reversed burden of proof in civil forfeiture proceedings, after the government makes its initial probable cause showing. In short, a reversed burden of proof UWO would likely withstand constitutional challenge in the U.S. if the Court were convinced that it is an in rem proceeding, a notable departure from the Civil Asset Forfeiture Reform Act (CAFRA).

There are two UWO concepts that would be novel to the U.S.: 1) the unexplained wealth concept and 2) the lack of a requirement to show a nexus between an offense and the property. If the U.S. were to consider enactment of a UWO statute it would have to resolve these issues to the satisfaction of reviewing courts. Regarding the first concept, one key to Ireland’s UWO success has been the CAB’s ability to proactively identify individuals with unexplained wealth. The use of a PULSE-like information exchange or fusion database system through which law enforcement can proactively compare citizens’ assets to income would raise the concern of civil liberties advocates in the U.S. Regarding the second concept, the U.S. has always required that the forfeited property be the proceeds or instrumentality of a crime. A law that makes the mere lack of a valid explanation for the possession of property sufficient reason for government seizure would raise the concern of property rights advocates.

The new Australian federal UWO law addresses some of the concerns likely to be present in the U.S. It provides greater forfeiture protections to the respondents and innocent third party property owners, has a requirement that the government show a nexus between an offense and the property, and has a “safety valve” that gives court discretion to dismiss UWO actions if they are determined to be unjust. It might serve as the basis for U.S. laws that may be drafted in the future.


Introduction 4

II. INTRODUCTION 2.1 Purpose of the Report The purpose of the report is to inform readers (practitioners and policymakers) on UWOs as an alternative to existing forfeiture and confiscation regimes, describe its key features, assess their application, and evaluate their effectiveness in two selected countries. In addition, the report identifies a number of issues policymakers should heed when contemplating introduction of UWOs in the U.S.

Recognizing that UWOs are a relatively new development in the area of forfeiture and confiscation laws, this report focuses on highlighting and describing key elements that distinguish UWOs from other confiscation laws. The report opens with a review of confiscation legislation in over 30 countries around the world with the purpose of identifying those that have enacted UWOs and those that have enacted non-conviction based legislation that have elements of UWOs, and other countries that have in place conviction based legislation with elements of UWOs. All these type of legislation have been classified in four different groups: i) countries that have true UWOs; ii) countries with non-conviction based laws that have some form of UWOs; iii) countries with conviction based laws that have some elements of UWOs; and iv) countries that have introduced illicit enrichment provisions, targeting proceeds of corruption.

Even though laws are relatively recent and at early stages of their implementation, the second section of the report makes an attempt to identify the effect these laws have had in the two selected counties (Ireland and Australia). The report addresses the background and specific circumstances that lead to introduction of UWOs and assesses the practical application of the law in the respective countries, obstacles and challenges faced during implementation, and lessons learned. To the extent possible, provided relevant and accessible data, the report also evaluates their effectiveness by comparing a predetermined set of metrics such as the size of seized assets, the rate of successful seizures versus those later overturned in the courts, and other similar metrics. Further, relying on mostly anecdotal evidence, the report attempts to assess the impact the UWOs have had in preventing and deterring crime by requesting feedback from agencies (prosecution, law enforcement, etc.) and professional experts (lawyers, civil society groups) engaged in implementing the laws. It is worth noting, however, that evaluating the impact of any law UWOs and its impact on deterring crime is a complex and difficult task. It requires precise data sets that can accurately correlate legislation to enforcement and to judgment. It also requires a prediction of crime rates, holding all other variables (other legislation, law enforcement techniques, and criminal behavior to name a few) constant for any given year in order to establish a baseline with which to measure the impact of the law. Such an endeavor is well beyond the scope of this report therefore any claims of the results or impact of UWO laws should be taken within the context in which the data were obtained, primarily through interviews with representatives of implementing agencies, law enforcement officials, other public officials, civil society groups, lawyers and media reports.

The concluding section of the report provides an overview of the forfeiture legal framework in the United States, assessing the ramifications of transferring these laws to the U.S. In this regard, key legal and policy issues are identified that policymakers should heed when contemplating introduction of UWO in the U.S.

Finally, although the report includes a description of conviction and non-conviction based laws in different countries around the world, the purpose of this report is not to conduct an evaluation of these laws, but to simply describe different laws that contain key elements unique to UWOs. Further the report does not attempt to educate readers on other conviction and non-conviction based laws as it assumes basic knowledge and understanding of these systems.


Methodology 5

2.2 Scope of Work and Methodology

Booz Allen Hamilton has been commissioned by the National Institute of Justice (NIJ) to conduct a comparative evaluation of UWOs worldwide, with a detailed study of two countries’ UWOs. The contractual scope of work includes the following:

1. Literature review of existing legal and other studies that have examined the benefits and pitfalls associated with unexplained wealth orders.

2. A full listing of all countries that have implemented some form of unexplained wealth orders and for what offenses (e.g. corruption, money laundering, etc.). This discussion can include laws that do not exist at the national level but rather at the state or regional level as well (e.g. Swiss canton’s law as opposed to Switzerland’s national law).

3. A full description of the process to seize unexplained wealth, with actual or potential bottlenecks identified.

4. A discussion of reporting requirements for each country. Reporting requirements include not only statements of seizures for unexplained wealth, but requirements for government officials, private citizens or others to report the sources of their wealth in a transparent way.

The analysis section in this document compares the unexplained wealth orders of two countries and provides the following information:

1. A full description of the laws and their usage in the country (to include copies of the legal codes and a discussion of how the laws were drafted and implemented).

2. An evaluation of the effectiveness of the laws and their application in the country. Effectiveness should be measured in terms of assets seized, the rate of successful seizures versus those later overturned in the courts and other similar metrics.

3. Lessons learned from the implementation of unexplained wealth orders, including a discussion of the obstacles in implementing such laws and the public’s impression of the law.

4. A transferability analysis for each country examined. Put simply, if the U.S. were to adopt that country’s law, what would U.S. lawmakers have to consider given the different legal codes and criminal justice systems between the countries.

Methodology

While much has been written on the techniques of standard confiscation regimes and how criminals evade them, little has been published (in English) in the legal community on UWOs, testifying to their novelty. The Australian Institute of Criminology in July 2010 published one of the more thorough articles thus far written on the subject. More on the subject has been written in media reports, mostly focusing on Australia’s UWO.

The relatively small amount of extant literature on the subject drove the methodology of this report. It is a data gathering and analysis effort based on independent research of original sources (statutes, legislative histories, case files, interviews with prosecutorial, law enforcement officials, defense attorneys, academics, etc.).

To determine the effectiveness and transferability of UWO laws, this report begins with a comprehensive review of current UWO laws (and any derivation thereof) enacted in a number of foreign nations. This is followed by a deep dive into two select countries (Ireland and Australia) that are much further ahead in the adoption, implementation and, in the case of Ireland, execution of UWOs. Finally, the report evaluates to what extent these laws have been effective and lessons learned for U.S. policymakers to determine whether it is worthwhile to propose enactment of such a law (or elements thereof) taking into account the inherent challenges in our legal system and public response. To accomplish this, Booz Allen followed a four-phased approach that focused on high quality standards of research and analysis while maximizing efficiencies to ensure budget and schedule constraints were kept in check.

Comparati

Methodolo

Phase 1 DThe objecliterature,foreign su

Immediatscope of sources thWhere apdemonstrathrough macces to linternatiobackgrounpublicatioAllen facresearch teffective d

Once the study or ebeen succand supporeducing r

Our resealiterature identifyinapproacheof data an

This apprrelevance were focu

ve Evaluation

ogy

Desk Researcctive is to ide and put tog

ubject matter

ely upon taskthe research,

hat would bepplicable, weated approprimajor subscriplegal journalsnal legal andnd on the lawon sources anilities using team.The abildata collectio

appropriate devidence-basecessfully testeort the develrisk by direct

arch and anareviews. Ba

ng the prevalees and tools. Ind sources col

roach is an imto complex

used on iden

F

of Unexplaine

ch and Draftentify the stugether the drexperts.

k initiation, t, and schedul of suitable r

e used primaiate reliabilityption-based rs and articles d foreign govew’s rationale,nd language.Tin-house explity to conduc

on effort.

data sources wed approach ded and used tlopment of eing research f

alysis team csed on the ty

ence of UWOIn addition, wllected.

mportant and wand well-def

ntifying the

Figure 1: Case

d Wealth Orde

t Report - Thudy objectiveraft deliverab

the research le and budgerigor to be inary sources, y and accuracresearch respo

written on thernment studi, challenges, This initial ppertise and suct this effort

were identifieddepicted in Eto guide the cevidence-basefocus and sou

ollected and ype and qua

Os and their imwe incorporate

widely used mfined problemstudy object

e Study or Ev

ers

he first step ines, design theble all before

team workedet constraintsncluded in threfereed jour

cy. In additioositories likehe subject mies since the constitutiona

phase of dataubject matter locally reduc

d, the data coError! Referconduct of lited, social sciurce identifica

categorizedality of data mplementationed a case stud

methodology m sets. Our etives and col

vidence-Based

n this phase ie study approe establishing

d closely with. This drovee Desk Resernals, and ot

on totraditiona Westlaw, Le

matter. In addimajority of t

al and other a collection wr experts in aced travel tim

ollection efforence source terature revieience framewation, and avo

results of crcollected, ann, we employdy method fo

in socio-legaexplicit goals llect pertinen

d Research A

is what we caoach, collect g contacts an

h NIJ to valie the identifiarch and datather open-soal open sourcexis Nexis anition, the teamthe informatioissues were iwas conducteacademia tha

me and allowe

rt was carriednot found..

ews, identificaworks. This moiding duplica

riminal and nd in view oyed the most r our initial re

al research as within this pnt data while

Approach

all Desk Reseavailable dat

nd interviews

idate this straication of typa collection eurce materia

ce data collecnd JSTOR wm reviewed ron sources suin these couned locally at at were part oed for a more

d out using ouThis approacation of data method assistation of effort

other legal jof the objecti

relevant analeview and an

s it has a partphase of the e ascertainin

6

earch. ta and s with

ategy, pes of effort.

al that ctions,

we had recent uch as ntries’ Booz

of the e cost-

ur case ch has

gaps, ted in t.

ustice ive of lytical

nalysis

ticular work

ng the


Methodology 7

obstacles faced by countries that have implemented UWOs, as well as relevant public opinion. Through the implementation of our case study approach we have identified lessons learned from the implementation of UWOs throughout the world by conducting a comparative analysis of the most relevant legal cases in our selected countries. The research and analysis team compiled results of Australia’s and Ireland’s unexplained wealth order and conducted analyses to determine relevant patterns, trends, casual-type relationships and conforming standards that will address the objectives of the study regarding the transferability of each country’s law to U.S. standards. In addition, to guide our data collection, we developed a protocol that we used for both record searches and interviews with participants.

There were two key outcomes of Phase One: 1) the identification of the two countries on which to focus our study and 2) a draft report and prelimniary findings. For the selection of the countries, the research team reviewed legislation of a number countries around the world that had implemented some form of UWOs. Of all the countries reviewed, two countries were selected based on a set of criteria2 indetified by the research team which among others included whether the country had a full UWO (no proof of the property being connected to a crime and reversed burden of proof), the relevance of a country’s legal system to the United States, and the political system of the country. Ultimately Australia and Ireland were selected as the two in-depth countries from the three countries that were found to have full-UWO laws.

For the second outcome, we presented our preliminary findings to NIJ to verify that the findings were consistent with expectation and that the countries selected were appropriate (prior to making budget commitments). Included in the presentation was a near- full description of the supervisory and technical strategies and procedures for UWO usage in each country, a preliminary evaluation of the effectiveness of those strategies and the application in the country, lessons learned from their implementation, and preliminary thoughts on the transferability of certain strategies and approaches that could be piloted in the U.S. This presentation was an in-person meeting allowing for a free and open forum of thoughts, concerns, and validation of the approach. It was an opportunity for NIJ to validate the findings, for the research team to communicate holes in the data that need to be gathered remotely, and set the parameters for the remaining pieces in the final report.

We also began drafting the final report. With much of the research complete, leaving the site visits to validate findings, our team developed the outline of the report, compiled results of the desk research, and developed a matrix and full descriptions of the laws and their usage in each country identified. This table, described in Section III of the report, is divided in four categories; 1) Countries that have implemented true UWO and apply them to all offenses and reverse the burden of proof (Australia, Colombia and Ireland); 2) Countries with non-conviction based confiscation laws that apply them to all offenses and have the presumption in favor of forfeiture; 3) Countries that have conviction based confiscation laws applicable to all offenses, reversing the burden of proof to the defendant; and 4) Countries that have illicit enrichment targeting PEP’s, reversing the burden of proof to the defendant in a criminal proceeding.

Phase 2 Site Visits - After exhausting local research opportunities and conducting the preliminary analyses, we identified foreign nationals in the countries of interest with expertise and knowledge in the area of civil forfeiture, and if available, knowledge in unexplained wealth orders, to further refine and target or data collection. These individuals were legal practitioners, government officials, policy makers, academia, and representatives of the defense bar with the goal of obtaining a deeper understanding and local perspective of the effect of UWO laws on the countries in which we reviewed.

In addition, by utilizing NIJ resources, we were able to establish contacts with the U.S. embassies in the two selected countries (Australia and Ireland) and establish contacts with the highest U.S. government officials engaged or knowledgeable in this area. In Australia, Western Australia and Ireland, we met with

2 For a full list of criteria’s see Appendix G


Methodology 8

the representatives of the General Attorney’s Office, the Director of Public Prosecution, law enforcement, representatives of the private bar, academics and others involved in the policy making related to UWOs3.

Phase 3 Analysis and Conclusions - In this phase, all data gathered from the previous phases were rigorously evaluated to verify intermediate conclusions and to develop new results. To conduct this analysis, we began by assessing the qualitative and quantitative data to develop functions that describe the relationship between the variables we select. These variables included asset seizures, the number of successful prosecutions, amounts of money seized, and requirements for the burden of proof and the nexus between an offense and the property seized.

Phase 4 Findings Presentation - The objective of the final report (this document) is to be comprehensive while anticipating and outlining the considerations that U.S. lawmakers would have to make if adopting each foreign country’s law given the different constitutional guarantees, legal codes and criminal justice systems. Consideration was given to all aspects of the legal value chain, incorporating input from all interviewees and sources of input at each decision point.

Challenges and Resolution - There were two major challenges to successful completion of this study. The first was gaining access to the required information. Large amounts of data were collected from disparate sources and all of them were not available for public review. It is also important to note that some data were contradictory and required time for verification and triangulation. At certain times it was difficult to obtain access to some of the data for several reasons: its sensitivity (sealed case files for example, settled cases for which there were no court records), or its currency (for ongoing court cases and investigations). Further, some data were obtained from proprietary sources. Gaining access to this information from multiple entities within several countries with varied requirements and regulations posed a unique cooperative challenge. The second challenge lied in the analysis, specifically normalizing the results from information gained from disparate sources with inherent differences to make meaningful comparisons. Key areas of difference include types of legal system, varying perspectives, amount of accessible information, and length of time in force for each law.

3 See Appendix F. Containing contact details of people interviewed.

Comparati

Findings

III. FIN

Backgro

UWOs arcriminal ato furtheenhancingenterpriseindividualconviction

The imporecognizeorganizedgain is thactivities.invest in motive is criminals criminals agencies fto other ltheir opeconviction

In an effocountries illegal actas it is calis convictconfiscatiproceedinevidence crimes foexpanded

Alternativwithout a is broughtthe countrforfeiture typically bthe U.S.,

4 There alsocontraband 5The first stviolations, Agores a manshall be quit6 The U.N. Cevidence sta

ve Evaluation

NDINGS

ound on As

re a relativelyactivities withr strengthen g the powees of their illils for whomn.

ortance of coned as an effed crime. The uhe main mo This profit ifuture criminconsidered toby diminishwhere it hur

for organizedaw enforcemrations. Thun and non-con

ort to combat have laws th

tivity or proplled in the Unted. Because ion is an actiong that happethat the defenr which he was part of the

vely or in parconviction. Tt as an actionry5 but their requires the

by the civil bU.K. Ireland

o is another form(e.g., drugs, certatute authorizingAct of July 31, 1n or a woman, ant." Convention agaiandard.

of Unexplaine

sset Forfeit

y recent devehout a predica

the fight ars of the icitly acquire

m insufficient

nfiscating proective tool inunderlying retive for crimis used to funnal activitieso act both as a

hing their caprts most, “the

d crime. Whilement strategies

s, confiscationviction base

criminal actihat allow autherty facilitati

nited States, thit is part of t

on against a pens after conndant’s propewas convictede USA PATR

rallel, some cThe non-conv against the puse increased

e state to proburden of prod, Italy, and C

m of in personam

tain weapons), eg civil forfeiture789, Sections 12

nd they die: then

inst Corruption 2

d Wealth Orde

ture

elopment in cate offense. Tagainst organstate in dep

ed property, pevidence ex

oceeds of crimn disrupting eason is that pminals to engnd lavish life. Indeed, rema preventive apacity to inveeir pockets”, e organized crs, removal oron of crimind confiscation

ivity such as horities to cong the crimeshe defendant the defendantperson, or in pnviction and erty was eithed.4 The crim

RIOT Act.

ountries haveviction based property itselfd greatly in tove that the oof or a prepoColombia.6 H

forfeiture, the cven though there

e was enacted by2, 36; 1 Stat. 39,

n the ox shall sur

2003 (UNCAC),

ers

confiscation aThey are designized crime,priving crimparticularly thxists for crim

me has long bthe activitie

profit or finangage in crimstyles, as we

moving the pand a deterrenest in future is regarded arime has showr reduction ofnal proceeds n mechanism

drug traffickonfiscate asses. In convictiis deprived ot’s sentence inpersonam. In

the governmer used in the

minal forfeitur

e laws that alconfiscation,

f, or in rem. Uthe 1980’s asproperty is t

onderance of However, in s

confiscation of pre may have been

y Congress in 178, 47. The concepely be stoned, an

, Article 54(1)(c)

and forfeituregned , by

minal hose

minal

been s of ncial

minal ell as profit nt to criminal act

as an effectivwn resilience f assets is cois embraced

ms.

king and otherets that are suion based conof his assets ban his criminan the U.S., crment must she facilitation re authorities

llow the gove, or civil forfeU.S. civil fors part of enhathe instrumen

f the evidencesome countrie

roperty that has n no underlying 89 as a sanction

pt dates back to Bnd his flesh shal

), recommends u

U

r

b

ju

f

e law, targetin

tivities. The ve strategy by and a high le

onsidered to hd by many

r organized cuspected to b

nfiscation, or ased on the c

al prosecutionriminal forfeithow by prepof, or derive

s in the U.S.

ernment to coeiture as it is rfeiture laws aanced drug entality or pr

e, which is thes, the standa

been legislativecriminal convict

n for the use of shBiblical times, Ell not be eaten; b

use of the prepon

Unexplained w

require a perso

beyond his app

ustify the legit

financial circum

Australian

ng the procee

strategy of hy law enforceevel of adaptahave an impacountries th

crime, a numbbe the proceecriminal forfrimes for whi

n, conviction ture is a bifurponderance oed from, one

were dramat

onfiscate the known in theare nearly as nforcement. oceed of a c

he standard usard is differe

ely deemed to betion. hips in customs

Exodus 21:28: "Ibut the owner of

nderance of the

wealth laws

on who lives

parent means

timacy of his

mstances.

n Crime Commission

9

eds of

hitting ement ability act on

hrough

ber of eds of feiture ich he based rcated of the of the tically

assets e U.S., old as Civil

crime, sed in ent. In

e

f an ox the ox

to

Comparati

Findings

Canada, fSouth Afrinstrumenaction.9

Over the combat oproceeds Transnatioin NarcotmandatoryconfiscatiFinancial recognizewell as thCorruptioillicit enrihe or she

Building heighten tand subsethe possibtraditionafaced con12quinquiburden ojurisdictio

7Max M. NeU. Miami In8 The civil sstandard –pr9South Afric10 See Artic11 Article 7 origin of allthe principle12 See recom13 Article 20significant iincome.

Burd Stan

reas Requ

ve Evaluation

for instance, tfrica on the ontality of an o

past two deorganized criof crime as aonal Organizetics Drugs any provisionsion, placing t

Action Taske the importanhe crimes undon13 of 2003 eichment as a ccannot reason

on the concethe fight agai

equently confibility of intrl confiscation

nstitutional anies to be unc

of proof vioons in Canad

elson, Federal Fnter-Am. L. Revstandard of proofreponderance ofcan Prevention ole 7 of the Palermof the Vienna Ceged proceeds oes of its domestimmendations 3 o0 of UNCAC, esincrease in the as

Criminal AForfeiture

den: govt. dard: Beyond onable doubt uires criminal co

Unex

of Unexplaine

there have beother hand reqoffense or the

cades, a largme, money

a way to reduced Crime10 (2

nd Psychotrops encouraginthe burden ok Force (FATnce of confisderlying monncourages cocriminal offennably explain

epts behind cinst organizedfiscate assets oroducing UWn regimes. Fend legal chalconstitutionallates the Ita

da, and New

Forfeiture and Mv. 43, (Fall 2009)f-balance of probf evidence. of Organized Crimo Convention onvention; “Eac

or other propertyic law and with tof the 40 + 9 FATstablishing illicit ssets of a public

Asset

onviction

xplained

d Wealth Orde

een recent devquires proof

e proceeds of

ge number oflaundering ace and deter 2000 Palermopic Substance

ng states to f proof on thTF) has been

scation laws tney launderinguntries, subjense, defined a

n.

confiscation, d crime in parof those engag

WOs into theew have ventllenges. For l, after only alian constitu

w Zealand) ha

Money Laundering). bability is a term

ime Act of 1998

ch Party may co liable to confiscthe nature of the TF recommendaenrichment as aofficial that he o

Civil As

d Wealth

Burden: govt. Standard: Preevidence Does not requconviction

ers

velopments in“on a balancunlawful acti

f internationaand corruptiocrime. This in

o), the Unitedes11 (1998, V

include nohe property on influential to combat mog.12 In additect to their coas a significan

some states hrticular by mged in crimineir legal systtured into theexample, thetwo years ofution. Other ave a presum

g: Undue Defere

m used in most o

, Ch. 5, Pt. 1.

nsider ensuring cation, to the extjudicial and oth

ations. a criminal offensor she cannot rea

sset Forfeitur

h Orders

(typically) ponderance of

uire criminal

n some province of probabiivities” for pr

al conventionon have adopncludes Unite

d Nations ConVienna). All t

n-conviction owner to sho

in getting thoney laundertion, the Unitnstitutional a

nt increase in

have adoptedmaking it easienal activities. tems, but me area of UWe Italian Conf use, when

countries (mption in fa

ence to Legal Fi

other countries th

that the onus of tent that such ac

her proceedings”

se when committasonably explain

e

s in Persp

Burd Stan

evid Does

nces to followilities”8, that roperty to be

ns and instrumpted the straed Nations Cnventions agathese conven

based confow legitimacyhe internatioring and terroted Nations Cand legal princ

the assets of

d unexplaineder for the stat Several coun

most have deWOs, and thonstitutional Cit determined

(e.g., Unitedavor of forfei

ictions and Cana

hat is the same a

f proof be reversection is consisten”.

ted intentionallyn in relation to h

UnexplainedForfeitu

pective

den: property owndard: Prepondeence s not require cri

w the U.S. mthe property forfeited in a

ments designategy of targonventions ag

ainst Illicit Trntions containfiscation or y of propertynal commun

orism financinConvention agciples, to intropublic officia

d wealth ordte to identify,ntries have decided to ma

ose that have,Court declaredd that shiftin

d Kingdom, iture for unl

adian Crossroad

s the U.S. civil

ed regarding thent with

y. Illicit enrichmhis or her lawful

d wealth ure

wner erance of

minal conviction

10

model.7 is an

a civil

ned to geting gainst raffics n non-

asset y. The nity to ng, as gainst oduce al that

ders to , seize ebated aintain , have d law ng the

some lawful

ds, 41

e lawful

ment is a

n


Findings 11

activities or specific offenses as part of civil forfeiture proceedings, but not full UWOs. Some countries have, under the umbrella of the United Nations Convention against Corruption (UNCAC), enacted illicit enrichment offenses targeting the proceeds of corruption, where the reversed burden of proof is part of the offense, but apply only to public officials, and not to all crimes. A similar approach was followed by France with an amendment to the criminal code, introducing criminal offenses in which the reversed burden of proof is a central element of the offense. For example, individuals associated with drug dealers who cannot reasonably explain their assets will be convicted and deprived of their assets. Three countries have full or pure UWOs: Australia, Colombia, and Ireland. Currently, the U.S. has no provision in its law for forfeiture based simply on unexplained wealth.

UWOs are part of non-conviction based asset confiscation because they do not require criminal convictions. However, they contain a number of features that substantially differentiate them from traditional non-conviction based asset forfeiture authorities. The first difference is that UWOs are an in personam forfeiture proceeding, whereby an action is brought against the person who owns or possesses the unexplained wealth or property. Secondly, the state does not have to show a predicate offense14. In traditional confiscation, the state must demonstrate that the property is derived from or facilitates a crime. In a UWO proceeding, the state is only required to show on civil standard of proof-preponderance of evidence (that it is more likely than not) that the respondent owns or possesses unexplained wealth, without specifically identifying the criminal activity that originated the wealth. This leads us to the third difference, reversed burden of proof. Once the state discharges its burden of proof, the burden shifts to the respondent to show that the property is lawful.

14 As will be discussed in detail in Section 3.2.2.1 while there is no predicate offense requirement under Irish law, in practice the CAB has set a higher standard of proof for the state, showing that the respondent has been engaged in criminal behavior. The CAB does not have to show that a specific offense was committed, but it is sufficient to show that there are reasons to suspect that the person has been engaged in criminal activities. Similarly in Section 3.2.1.6 while the WA law does not have a requirement for a predicate offense, in practice the courts have imposed a higher burden on the DPP, obliging them to show some connection between the respondent and crime. The new Australian federal UNEXPLAINED WEALTHHUNEXPLAINED WEALTHHO has a requirement for a predicate offense.


Findings 12

3.1. REVIEW OF ASSET FORFEITURE AND CONFISCATION SYSTEM

This section walks through the four categories of UWOs and the countries that fall within each one. It is organized accordingly:

Section 3.1.1) Countries that have implemented true UWOs and apply them to all offenses and reverse the burden of proof

Columbia (note: Australia and Ireland are covered in more detail in Section 3.2)

Section 3.1.2) Countries with non-conviction based confiscation laws that apply them to all offenses and have the presumption in favor of forfeiture

Antigua and Barbuda Canada New Zealand South Africa United Kingdom

Section 3.1.3) Countries that have conviction based confiscation laws applicable to all offenses, reversing the burden of proof to the defendant; and

Austria France Italy Netherlands Switzerland

Section 3.1.4) Countries that have illicit enrichment targeting PEP’s, reversing the burden of proof to the defendant in a criminal proceeding

Hong Kong Singapore

3.1.1 Countries that implemented UWOs and apply them to all offenses and reverse the burden of proof

As stated earlier, three countries have full UWOs and apply them to all offenses: Australia, Colombia and Ireland. Australia and Ireland are the two countries that were selected for in-depth analysis in this study, and therefore are explored later (see Section 3.2). Colombia has not been one of the countries selected for an in-depth study, thus here we only provide an overview of the Columbian UWO law.

Colombia

Efforts by the Colombian government to dismantle drug trafficking networks, attack organized crime structures, and fight money laundering have led to numerous legislative initiatives, including the Anti-Money Laundering Law and National Drug Act of 1986 and 1996. In strengthening measures to fight organized crime, in 2002 the government adopted the Civil Asset Forfeiture Law, widely referred to as Law 793. The law was a joint initiative of the Ministry of Justice and the Ministry of Interior, supported by the National General Prosecutor’s Office and the National Anti-Narcotics Office. The law codified illicit enrichment as an illegal activity for which assets can be forfeited by a court if the owner cannot justify their legitimate origin. Moreover, the law shifted the burden of proof onto the respondent to justify the legitimate origin of his or her assets and property. This law is regarded as one of the most comprehensive forfeiture laws in Latin America.15 Although conviction based confiscation of assets has 15U.S. Department of State in the report of 2008. Available online at: http://www.estandardsforum.org/colombia/standards/anti-money-laundering-combating-terrorist-financing-standard, accessed January 6, 2011


Findings 13

been used in Colombia since 1930, the introduction of non-conviction based assets forfeiture is a novel concept in the country’s legislation.

Colombia also has in place several illicit enrichment laws that criminalize unlawful accumulation of wealth by individuals and public servants during the time they are in the office. The burden of proof is on the respondent or the public official to justify the source of wealth and the proceedings are criminal with a standard of proof beyond reasonable doubt. The illicit enrichment offense for public servants carries a sentence of 6 to 10 years and for individuals 5 to 10 years of imprisonment and payment of an equivalent amount to the value derived from the unlawful conduct.

In its fight against drug trafficking problems, Colombia has enacted several laws that target proceeds of crime, as outlined above. Due to the focus of the report on unexplained wealth orders we are focusing on the Civil Asset Forfeiture Law (Law 793) of 2002 and providing a description of the operation of the Act and key challenges faced in the course of the implementation.

Non –conviction based asset forfeiture

In 2002, the Colombian government introduced two laws to strengthen the system of civil asset forfeiture. Law 793 was designed to resolve earlier inefficiencies in the system and improve the management of asset forfeiture cases by imposing strict time limits on proceedings, reducing the time allowed to submit challenges and requesting accelerated forfeiture actions by the judiciary. The law also placed an obligation on interested third parties to demonstrate their legitimate interest in the property to protect their rights. Law 785 introduced a number of policies to strengthen the management of seized assets by establishing a fund for the administration of seized and forfeited assets, designating the National Drug Enforcement Directorate (NDED) as the agency responsible for managing seized assets.

Pursuant to law 793 the court can order the forfeiture of assets whether or not the respondent has been convicted of an offense. Forfeiture is imposed against the owner’s property (in rem) and the prosecution is not required to establish a causal linkage between the concerned assets and a criminal offense. The court can order forfeiture if the prosecution establishes that one of the following grounds exists: illegal enrichment offense, acts against the public treasury, a corruption offense, or other specified criminal activities.16 Property subject to inheritance is subject to forfeiture if the property is considered to have been derived from or involved in offenses listed in Article 217 of the law.

The court can order forfeiture of assets or property when—

There has been an unjustified increase in personal assets, at any time, and no explanation of the origin of assets is offered, or

The property is derived directly or indirectly from illegal activities, or The property was used as a means or an instrument to carry out an illegal activity, or The property is derived from transfer or exchange of other resources derived from illegal

activities, or the property or rights involve legally obtained property used or intended to be used to conceal or mix with illegal property, or

When the legal origin of the property sought during the trial cannot be demonstrated.

Court proceedings are initiated by the Office of the Prosecutor General (OPG), with the Comptroller General, Police and Investigation Agencies, and the National Drug Enforcement Directorate (DNE)

16 Articles 1, 2, and 3 of Law 793 of 2002. Illegal activities referred to under these articles include: Conduct against Public Treasury such as embezzlement, illegal interest in contracts, contracts violating legal requirements, illegal monopolies, theft of national security and defense goods and equipment, offenses against public welfare, improper use of privileged information, utilization of secrets or information under seal, and activities that cause serious damage to social welfare, such as public health, social and economic order, public administration, the rule of constitutional law, kidnapping, kidnapping for extortion, extortion, and pimping. 17 See ibid at 4.


Findings 14

obliged to report to the OPG the existence of any property that may be subject to the forfeiture order. The law authorizes the NDE to be a party to the forfeiture proceedings initiated by the OPG, with full authority to present evidence, request preventive measures, and contest any decisions made. The law also provides that any person can be rewarded with up to 5 percent of the total amount forfeited to the state if he or she provides useful information to the prosecutor related to the property that may lead to the forfeiture order.

The forfeiture proceedings are independent of any criminal proceeding. Proceedings are governed by the rules of civil proceedings and the civil standard of proof is applied. In practice proceedings are lengthy and complex, and present many opportunities to appeal the evidence and the decisions. The OPG initiates the proceedings, can order preventive measures, can issue a freezing or seizure order, and can prevent anyone from disposing of or otherwise dealing with the property. If a freezing or seizure order is not issued during the investigation stage, one can be issued during the initial proceedings at the request of the prosecutor ex officio. The Solicitor General and all interested parties will be notified of such an order within five days from the day the order was issued. If parties cannot be identified, the court will consider it sufficient if a notice has been left at the address on records for the interested parties. Third parties also will be notified through an edict, posted at the Office of the Clerk as well as through national newspapers and radio. If no party has responded the court will identify a guardian ad litem.

After the notification periods have expired, the court will review the evidence within 30 days, the prosecution will decide whether or not to pursue the forfeiture order, and will send the case to the assigned judge. The judge, depending on the evidence, will issue a forfeiture order or will abstain from doing so. The only avenue available for appeal is the direct appeal to a superior court within 30 days. A judgment that is not appealed is required by law to undergo a consolatory judicial review.

Reversal of the burden of proof is permitted under Colombian legislation, shifting the burden onto the respondent to provide satisfactory evidence to establish the legitimate origin of his or her assets. The Colombian Constitutional Court has endorsed the reversal of the burden of proof in civil asset forfeiture, describing it as a “dynamic burden of proof” holding that “requiring the one who is better able to prove a fact, to be the one to prove it. In forfeiture cases, the owner is in a better position to prove the lawful origin of his or her property and undermines the prosecution’s attempt to prove the illicit origin of the assets.”18 Further, the court held that shifting the burden of proof onto the respondent is acceptable because it is a civil proceeding and no penalty is imposed on the individual. The respondent has the right to provide new evidence to challenge decisions made within the process; usually, a person with lawful income has no trouble proving the legal origin of his or her assets. The Constitutional Court held that the law protects only the rights of those who acquire property by licit means. Those who acquire property unlawfully cannot claim the protection provided by the legal system. The main purpose of the law is to capture the results of the illegal activity.

Financial investigations are carried out by law enforcement, Financial Information and Analysis Unit (UIAF) and the General Prosecutor (Fiscalia). Their role is to gather sufficient evidence from various sources including prior judgments and court decisions, public deeds and real estate records, operation reports of buying, selling, money transfer, travels and the like and provide them to the attorney general to initiate the case.

The UIAF, established as part of the Ministry of Treasury and Public Credit in 1999, is considered one of the most sophisticated financial intelligence units in the developing world. It is an independent unit with administrative autonomy in staff administration and has administrative autonomy and legal capacity. The UIAF has developed a system of Risk Management of Asset Laundering and Terrorism Financing (SARLAFT).

18Constitutional Court, Sentence C-740-03, Judge Dr. Jaime Cordoba Trivino


Findings 15

Cooperation between the UIAF and the financial sector is positive because the banks are not restricted by the confidentiality clause when a financial institution suspects money laundering activity. Further, under the Anti-Money Laundering Law, financial institutions are required to report cash transaction of more than 5,000 pesos and maintain records of account holders and financial transaction for a period of five years.

Effectiveness Notwithstanding the amendments introduced by Laws 793 and 785 to improve and expedite the process for resolving forfeiture cases, the general consensus is that the results have been far from satisfactory. The complexity of the legal system continues to slow the resolution of forfeiture cases, while those involved in violating the law adapt remarkably quickly to the new policies and laws introduced by the government. On the other hand, the government institutions face many challenges that slow implementation of the laws. The Fiscalia (General Prosecutor) has a large backlog of cases and lacks adequate human resources (prosecutors and judicial police) to carry out investigations and fight money laundering.19

The main obstacles are faced by prosecutors in small towns, provinces that are ruled either by armed groups or by local traditional landlords. When procedures are initiated to seize property, the Fiscalia faces several challenges. For example, such procedures must address issues related to many property deeds because most of the municipal records are inaccurate. Also, it is not uncommon for local staff to refuse to cooperate, either because they are corrupt or they are controlled by those whose property rights may be challenged. In addition, the records often are maintained manually, which means they can be easily manipulated or forged, and powerful landlords use their power to impede modernization of records. It is not uncommon for the records of seized property to disappear altogether; in such cases, the Fiscalia has no means of proving the existence and the ownership of property or assets.20

Asset management of seized assets has also been an area of great concern in Colombia. Law 785 designated the NDED as the agency responsible for managing seized assets from the time of seizure until a court makes the final decision on the forfeiture or return of assets to the owner. DNE is responsible for verifying the status of seized property, maintaining an inventory of the seized assets, identifying interim management of the property through an open solicitation process, and ensuring reasonable preservation of the economic value of the property.

Some elements of the asset management system are considered highly successful; other elements require further improvements to preserve the value of the seized assets and to reduce the maintenance costs. Assigning private real estate properties and leasing of hotels through specialized hotel operators has been highly successful, while on the other hand management problems related to maintaining inventory records has proved highly challenging, especially when it comes to motor vehicles, which are maintained in a number of different locations. Further, the law does not provide any discretion when seizing assets, which means that all assets are seized, regardless of their condition or value. It takes years for the court to make a final decision on assets; steps have not been taken to remedy the situation because it requires corresponding increases in personnel to manage the new systems. Until the end of November 2008, DNE had received 80,860 assets to manage while forfeiture was in the process. Of those assets, 12,397 (15.3%) had been returned to their owners, who had obtained favorable judicial sentences. Only 7,734 (9.6%) had been forfeited, and the remaining 60,729 (75.1%) were in the judicial process. This demonstrates the slowness of the forfeiture process and the delays in reaching final decisions.21

19 Francisco E. Thoumi & Amrcela Anzola: Extra-legal Economy, Dirty Money, Illegal capital inflows and outflows and money laundering in Colombia 20 Francisco E. Thoumi and Marcela Anzola, Extra –legal Economy, Dirty Money, Illegal capital inflows and outflow and money laundering in Colombia, Second Draft University of Texas, Austin 21 Clara Garrido “Illicit Enrichment; Theory and Practice in Colombia”; Stolen Asset Recovery- A good practices Guide for Non-conviction Base Asset Forfeiture, 2009 The International Bank for Reconstruction and Development/The World Bank


Findings 16

3.1.2 Countries with non-conviction based asset forfeiture laws that apply to all offenses with a presumption in favor of forfeiture

Antigua and Barbuda

Antigua and Barbuda have in place a multitude of laws targeting the proceeds and instruments of unlawful activities as well as laws on illicit enrichment. One of the first laws adopted targeting the proceeds of crime was the Proceeds of Crime Act (PoCA)22 of 1993, which established a conviction-based confiscation and forfeiture23 of property derived from scheduled offenses. Introduction of the Money Laundering Prevention Act (MLPA24) in 1996, in addition to providing for administrative seizure and forfeiture of currency (money seized at border crossings) also introduced non-conviction–based asset forfeiture without a requirement of a predicate offense. Further, in 2004, Antigua and Barbuda also adopted the Prevention of Corruption Act (PCA), introducing illicit enrichment offense primarily targeting government officials and civil servants who were suspected of committing a corruption offense. These provisions enabled the state to confiscate any property acquired by the respondent as a result of the commission of an offense. The person alleged to have committed a corruption offense bears the burden of proof and is required to adduce evidence to satisfy the court that the property in question was acquired through lawful means. In addition to these laws, the Misuse of Drugs Act (MDA) of 1998 provides for seizure and confiscation of narcotic substances, following conviction.

PoCA and MLPA are key laws in the legal framework of Antigua and Barbuda in targeting proceeds and instrumentalities derived from illegal activities. Both acts provide for conviction and non-conviction based forfeiture and confiscation, seizure, and restraint of property. Proceedings under the MLPA are civil in nature and all the facts of the case are decided on the civil standard of proof-balance of probabilities. The initial burden of proof is on the prosecution or the special entity authorized to institute proceedings under the MLPA, the Supervisory Authority. After the Supervisory Authority meets the initial burden of proof satisfying the court that the property in question is tainted property, the burden shifts to the defendant, compelling him or her to justify the legality of the property. A novel concept introduced with MLPA is the automatic forfeiture of seized property within 90 days. Proceedings under PoCA are decided based on a criminal standard of proof, beyond reasonable doubt.

Targeting proceeds of crime under PoCA and MLPA

The objectives of PoCA are multifaceted, but the main objective is to deprive persons of the proceeds, benefits, and property derived from commission of a scheduled offense25 and of property used in commission of an offense (instrumentalities of crime). PoCA’s objective is to enable law enforcement authorities to trace and confiscate property constituting proceeds of an offense. The definition of the “proceeds” of an offense is defined in the preamble of PoCA as “any property that is derived obtained or realized, directly or indirectly by any person from the commission of a scheduled offense.”26 Similar definition of “proceeds” is contained in the MLPA, with the difference that it does not only cover proceeds from specific offenses, but it includes proceeds derived from any offense committed in Antigua or Barbuda or elsewhere27.

The PoCA provides for confiscation and forfeiture of proceeds following conviction of a defendant for commission of a scheduled offense, which means that the prosecution can apply for confiscation or a 22Available at http://www.laws.gov.ag/acts/1993/a1993-13.pdf, accessed March 21, 2011 23 Confiscation and forfeiture are used in the PoCA of 1993. Confiscation is used to describe in personam conviction based regime, and forfeiture is used to describe in rem conviction based regime. 24 Available at http://www.antigua-barbuda.com/finance_investment/MoneyLaunderingPreventionAct18-9-02.pdf, accessed March 22, 2011 25 See PoCA, 1993, p. 62 26 Section 3(1) of the Proceeds of Crime Act of 1993 and section 2(1) of the Money Laundering Prevention Act of 1996 27 See Section 2(ii) (b); an offense committed elsewhere includes “ any foreign law, whether or not it is specified by regulation under this Act which prescribes dealings in property which is the proceeds of crime, which, if it was committed in Antigua and Barbuda, would be an offense against this Act or any other law of Antigua and Barbuda”.


Findings 17

forfeiture order only after the defendant’s conviction. Forfeiture orders are brought against “tainted” property28, while confiscation orders are brought against a person convicted of an offense in relation to the benefits derived from that offense. Differing from PoCA, provisions under MLPA are broader and can be applied in cases when a person has not been convicted. Moreover, the statute provides that a person is taken to be convicted of an offense, if he or she is convicted of an offense either in Antigua or Barbuda or elsewhere, or if the person has been found guilty of an offense or the court has declared that the person has absconded.

Restraining and freezing orders under PoCA and MLPA

Proceedings under PoCA generally commence with an application for a restraining or a freezing order to prevent property from being disposed of or dissipated. The court can make an order restraining property on an ex parte application of the Director of the Public Prosecution (DPP) supported by an affidavit. The affidavit must state whether or not the person is convicted of or charged for commission of a scheduled offense, the specified property, and reasonable grounds to believe that the person has benefited from the offense. If the court is satisfied, it will issue a restraining order, prohibiting a person from dealing with the property, and also can appoint a Public Trustee to manage or deal with the property. The court requires that all parties affected by the restraining order be notified. Similarly, in conviction based confiscation proceeding under the MLPA, the High Court will issue a freezing order on application of the Supervisory Authority, if the defendant has been convicted of or will be charged with a money laundering offense. In cases when the defendant has not been convicted of an offense it is required that the application be supported by an affidavit submitted by an authorized officer29 stating the grounds on which he or she based suspicions that the defendant had committed an offense. In cases when the application is made relying on proposed charging of the defendant, the order will not be made unless the defendant is charged within 30 days. Any person contravening a restraining order can be fined or imprisoned.

Forfeiture and confiscation under PoCA

The PoCA of 1993 provides for a conviction-based in rem forfeiture to be instituted against the property and conviction-based in personam confiscation against the person to deprive him of benefits derived from commission of the scheduled offenses. Both proceedings are instituted by the DPP to a competent court, after the person has been convicted of a scheduled offense, but within a 12-month period from the day the person was convicted of, or charged, with an offense. For the purpose of the forfeiture and confiscation proceedings, the person is assumed to have been convicted of an offense if he or she has been convicted summarily or if there is an indictment or if a person was charged with the offense, found guilty, and discharged. Although PoCA provides for confiscation of property only following a conviction, it also contains a provision that enables the court to complete forfeiture proceedings before the defendant has been sentenced. This proceeding can be characterized as non-conviction based as no sentence has been imposed against the person or no determination of guilt has been made.

The burden of proof the prosecution has to meet in a forfeiture proceedings differs from the confiscation proceeding. In an application for a forfeiture order, the DPP must establish that the property in question is tainted property,30 but in a confiscation proceeding, the DPP must establish that the defendant has benefited from the commission of scheduled offenses. In determining whether or not the property is tainted, the court will consider the following:

28 See section 19(2) (a)(b)(c) of PoCA 93- Tainted property is considered property that is used in, or in connection, or has derived as a result of the commission of the offense of which offense the person was convicted of. 29 An authorized officer is defined in Part 1, section 2 of the Act to mean a person authorized by the Supervisory Authority to perform certain acts or functions under this Act. 30 Tainted property is defined to be “(i) property used in, or in connection with the commission of the offense; (ii) property derived, realized or obtained, directly or indirectly from the commission of the offense.


Findings 18

(a) if the property was used in, or in connection with the scheduled offense, where the evidence establishes that the property was in the person’s possession at the time of, or immediately after the commission of the offense; (b) if the property was derived or obtained as a result of the offense, if evidence shows that property or money was found in person’s possession, or in a building, during investigation or search; and (c) the increased value of property will be considered to have derived from the offense, if the evidence shows that the increase resulted after the commission of the offense for which the person was convicted and evidence shows that the value of all property of the defendant exceeds the value of property prior to the offense and that the court is satisfied that persons income cannot account for the value increase.

In deciding whether or not to impose forfeiture, the court also will consider the gravity of the scheduled offense, the interests of third parties in the property, the hardship caused to any other person, and the ordinary use of the property.

In a confiscation proceeding, in determining whether or not the defendant has benefited from the offense, the court will, unless the contrary is proved, presume that all property held by the defendant when the application is made, or held at any time within a period of six years from the day the application is made, is property derived from the commission of the scheduled offenses for which the defendant is convicted. This includes all expenditures incurred by the defendant or any property received at any time. Moreover, in a confiscation proceeding, when the prosecution tenders a statement alleging that the person has benefited from an offense and determines the value of that benefit, the court will provide the defendant with an opportunity to respond to the prosecutor’s statement. The defendant’s failure to respond will be treated as acceptance of the allegations; similar opportunity is provided to the prosecutor on the defendant’s tendered statement. In confiscation proceedings, the burden shifts to the property owner, first under section 19 (3), whereby the court will make a certain presumption unless the defendant adduced evidence to justify a legitimate source of the property. And second, sections 20 (1) and (2) provide the defendant with an opportunity to rebut the prosecutor’s allegation and to present sufficient evidence proving the legitimacy of the property. The first situation is a clear example of the reversal of the burden of proof onto the defendant to present evidence and establish legitimacy of his or her property, but in the second instance it is more a rebuttal of the allegations made by the prosecution. No reversal of the burden of proof is provided under the forfeiture regime.

Another difference between the forfeiture and confiscation regimes is that under the forfeiture regime, an order can be issued to forfeit either the “tainted property,” including immovable property or the defendant will be ordered to make a payment of an equal amount if the property is not available for forfeiture. In the confiscation regime, the court will order the defendant to pay a specific amount of money equivalent to the property or a sum of money realizable at the time the order is issued.

Both regimes provide for the protection of third parties, whereby the court will exclude property or an interest in a property on an application made by an innocent third party if satisfied that the person was not involved in the commission of an offense and that he or she had acquired property for sufficient consideration.

The statute also provides for variation and amendment of forfeiture and confiscation orders. Finally, if the defendant fails to make a payment or to deliver property as specified in the forfeiture or confiscation order, the court may impose a fine and imprisonment; the value of the fine or the number of years of imprisonment will depend on the value ordered to be paid. The defendant or third parties can be compensated if a forfeiture order was issued based on serious defaults in the investigation and if the defendant has suffered substantial loss. Under PoCA the court can make an order allowing for payment of reasonable living and business expenses from the frozen property, including defendant’s reasonable legal expenses incurred in a proceeding under this act.


Findings 19

Non-conviction based asset forfeiture under the MLPA

Seizure, detention, and forfeiture of currency Under the MPLA customs officers, custom guards, and police officers are granted the authority to seize and detain for a period of up to 7days any discovered currency of more than $10,000, if they have grounds to suspect that the currency is proceeds or an instrumentality of an offense. The detention period can be extended on the application of the Supervisory Authority,31 until proceedings against the person from whom the money was seized have been concluded; however, the period cannot be extended for a period longer than two years from the day the money was seized. Seized money can be partially or fully released if the court is satisfied that the grounds on which the money was detained no longer exist or that continued detention could not be justified. Magistrate court may make an order forfeiting the currency if satisfied that the currency is proceeds from some form of unlawful activity32 or an instrumentality of any offense (whether the person has been convicted or not). In determining whether or not the currency is proceeds or an instrument of an offense, the court will consider the use ordinarily made, or intended to be made, of currency and claims of any third party to an interest showing that they were not involved or aware of any unlawful use of currency. The act requires that notifications be sent to all parties with an interest in the currency. Similarly, PoCA provides for seizure of property if there are reasonable grounds to suspect that the property is tainted.

Non-conviction based forfeiture The MLPA provides for conviction and non-conviction based forfeiture. A characteristic of the MLPS forfeiture regime is the automatic forfeiture of property, whereby property can be forfeited to the Crown, 90 days after one of the following takes place, whichever is later: (a) a freezing order was issued or (b) the defendant has been convicted of an offense. Conviction-based forfeiture is governed by section 20 (a) and 20 (b(1)), whereby 90 days following conviction of the defendant of a money laundering offense the property is forfeited. Non conviction–based forfeiture is governed by section 20b (ii), which empowers the court to forfeit property subject to a freezing order issued on the grounds that the person will be charged or proposed to be charged with an offense or a related offense. The court will order forfeiture of the property 90 days after the forfeiture order is issued.

The law also empowers the respondent to exclude the whole or part of the property or an interest in the property (s. 19 b(5)) from a forfeiture order, if he or she is able to satisfy the court that the property is not proceeds or an instrument of an offense, or is in any way related to any unlawful activity. By way of this provision the burden of proof is reversed to the defendant to show that his or her property is not proceeds or an instrument of a money laundering offense.

The law provides protection for third parties with an interest in the property, empowering them to seek an exclusion order, even after a forfeiture order has been made. An application for exclusion will be permitted only if a court is satisfied that the person was not involved in the commission of an offense, his or her interest in property was not a result of a gift or under effective control of the defendant, and the applicant did not know that the property may have been an instrument of an offense, or could have not reasonably known that the property was an instrumentality of the offense.

Further, the statute allows for amendment of a forfeiture order or submission of a new application for a property related to the same offense33. All funds derived from released or sold property are deposited into a Forfeiture Fund established under the administration and control of the minister. The fund is used for

31Ministry responsible for national drug control and security, as the designated agency responsible for implementation of the MLPA, establishes a specific entity Supervisory Authority to supervise financial institutions in monitoring implementation of the Act and instituting proceedings for forfeiture and freezing orders. 32 Unlawful activity is defined in MLPA to mean an act or omission that constitutes an offense against a law in force in Antigua and Barbuda or against a law in a foreign country, if it was committed in Antigua and Barbuda, be an offense against a law (section 2(1)). Similarly PoCA, section 3, defines it to be an act or omission that constitutes an offense against a law in force in Antigua and Barbuda or against a law of any other country. 33 See s.5(4) new application is allowed only if the court is satisfied that the benefits or advantages were identified after the previous application was determined, or new evidence become available at a later date. S.7 provides also that an application can be amended during the proceeding.


Findings 20

anti-money laundering activities, with the exception of 20 percent, which is set aside for administrative fees. In addition, the Act also contains provisions on the mutual legal assistance Act, on matters concerning money laundering offenses.

Finally Antigua and Barbuda enacted the Corruption Prevention Act (CPA) in 2004 to prohibit corruption and impose penalties for persons who committed corruption offenses. The Act was intended to be used against any person employed by the government or other public body who solicits or receives gifts, loans, fees, or advantage in exchange for performing or abstaining from performing, or expediting, delaying, hindering, or preventing the performance of an official duty by a public official.

The offense of illicit enrichment in Antigua is similar to the provisions incorporated in many statutes of other countries, criminalizing unexplained wealth derived as a result of an offense and shifting the burden of proof onto the defendant to defend himself and show how he was able to maintain that standard of living and how he acquired those pecuniary resources or property. If the court is not satisfied that the property and pecuniary resources were lawfully acquired, it can, in addition to the penalties, confiscate the pecuniary resources or property that the accused could not explain. The defendant has a right to appeal the court’s decision. A safeguard has been included in the statute, potentially preventing malicious or false allegations by making it an offense to make false allegations or provide false information.

Monitoring, examination, and production orders Both PoCA and MLPA provide for an array of investigative powers, such as production, examination, and monitoring orders. However, limitations are imposed on these powers to limit the negative effect they may have on parties to proceedings. For example, under MLPA, a person can be examined by a court, and he or she cannot be excused from answering the questions on the grounds that the answer might incriminate him or her. However, the Act prohibits the use of information obtained during examination, or any other investigation technique, as evidence in criminal proceedings against the person, except in a proceeding for giving false testimony in the course of examination. Part IV of the Act overrides secrecy obligations or other restriction on disclosure of information. The Supervisory Authority is empowered to share information related to any suspicious transactions with any governmental agency inside or outside Antigua and Barbuda.

The police officer is authorized under PoCA to issue a production order, directing a person who has a document relevant to identifying, locating, or quantifying tainted property, to produce it or to make it available to the police officer. This does not include accounting records used in the ordinary business of a bank. The person producing the document will not bear any consequences for producing the document and it cannot be used against the person in any criminal proceedings except if the person fails to comply with the order. Further, on an application by a police officer, a judge can issue a monitoring order directing a financial institution to disclose information about transactions conducted by the account holder if there are suspicions that the person is about to or has committed a scheduled offense or has benefited from an offense. The financial institution is prohibited from disclosing to anyone the fact that such an order was issued. Finally, the PoCA enables the DPP, for the purpose of an ongoing investigation that is authorized by a judge, to request the Commissioner of Inland Revenue to disclose tax information to the DPP.

Canada

Canada has both conviction and non-conviction–based in rem asset forfeiture. Conviction-based asset confiscation is governed by the Criminal Code while non-conviction–based forfeiture is governed by the provincial civil asset forfeiture laws. The Canadian constitution empowers the federal parliament to legislate criminal law and the provincial legislature to legislate civil law.

Most of the Canadian states have introduced non-conviction asset forfeiture laws, joining the ranks of states that have such laws, such as Ireland, U.K., United States, Australia, and South Africa.34 The first

34 See generally Simmers, Jeffrey, “Perspectives on Civil Forfeiture” in Young, Simon, ed., Civil


Findings 21

jurisdiction in Canada to introduce civil asset forfeiture was Ontario, with the Remedies for Organized Crime and Other Unlawful Activities Act in 2001, known as the Civil Remedies Act of 2001, followed by Manitoba, Saskatchewan, British Columbia, Nova Scotia, and Quebec. Canada has not yet adopted a civil forfeiture law at the federal level that would unify the non-conviction forfeiture regime across the country.

The first non-conviction based forfeiture statute enacted in Canada was in the state of Ontario. The statute is an in rem forfeiture proceeding, targeting the proceeds and the instruments derived or used in a commission of unlawful activity. Forfeiture proceedings are in rem and as such as instituted against the property attaching “guilt” to the property. The statute of Ontario is a result of a broad international and local research of confiscation and forfeiture legislation, including U.S. Australia, U.K. and Ireland. Though it is widely believed that the in rem forfeiture served as the main model, the Ontario statute contains a number of features that are unique and original to it, such as presumption in favor of forfeiture of instrumentalities of crime, compensation of victims who suffered from the unlawful activity to name a few.

Following enactment of the Ontario statute, other states of Canada followed and enacted similar statutes, largely mirroring provisions of Ontario however they do contain elements that set them apart. The key differentiating feature is the inclusion of presumption in favor of forfeiture. While the statute of Ontario and Alberta have included such presumption only in regards to forfeiture of instrumentalities of the crime, other statutes including British Colombia, Saskatchewan and Nova Scotia have a presumption favoring forfeiture for both proceeds and instrumentalities of the crime. The statutes generally have a requirement of a predicate offense, requiring of the state to show that an offense was committed and establish a link between the proceeds and the offense. It is important to note, that although all non-conviction civil forfeiture laws of the Canadian provinces are in rem, they all contain a requirement to identify the person who is in possession or ownership of the property. However, failure of the applying authority (prosecution or the chief of police) to identify the owner will not prevent forfeiture of property. Further, all statutes provide for compensation of losses incurred as a result of restraining or forfeiture order if the order is later revoked, it provides for victim’s rights, and reimbursement of the respondent’s legal expenses. In addition the statutes establish a fund from which payments are made to compensate victims, support activities that fight crime and provide for compensation of police and law enforcement forces for costs incurred under a proceeding under this Act.

It is important to note that while in general non-conviction asset forfeiture statutes provide for forfeiture of proceeds derived from certain offenses, usually for serious and organized crime, the statutes of Canadian provinces are construed in a broad manner to capture proceeds acquired or resulting from any unlawful activity. The definition of unlawful activity is broad and includes any offense that is considered as such under an Act of Canada, Ontario, or other provinces and territories, or an act committed outside of Canada, that is an offense in Canada.

Opponents of the law have argued that the provincial governments are trying to carry out criminal proceedings in a civil forum, but this argument was dismissed by the courts, which held that this is an in rem proceeding targeting property acquired from unlawful activities and is not directed toward a person. In addition, the Supreme Court of Canada upheld the constitutionality of civil forfeiture Act of Ontario in Attorney General of Ontario v. $29,02035 where the respondent challenged the right of the provincial government to encroach on the right of the federal government to legislate criminal law. The Supreme Court upheld the constitutionality of the provincial legislation, contending that civil forfeiture laws fall under the jurisdiction of the provincial power.

Forfeiture of Criminal Property: Legal Measures for Targeting the Proceeds of Crime (Edward Elgar Publishing, Inc.: Northampton, MA, 2009) 13 at 13. 35 Court case: Attorney General of Ontario v. $29,020 in Canadian Currency et al.


Findings 22

Ontario

Ontario was the first jurisdiction in Canada to introduce non-conviction (civil) forfeiture laws, with the Remedies for Organized Crime and other Unlawful Activities Act in 200136 (referred to as the Civil Remedies Act). The purpose of the Act37 is to (1) compensate those who suffered pecuniary and/or non-pecuniary losses as a result of unlawful activities, (2) deprive those benefiting from unlawful activities of their ill-derived assets, (3) to prevent re-investment of the ill-gained benefits in future unlawful activities, and (4) to prevent injury to the public that may result from conspiracies to engage in unlawful activities.38 The Act sets forth three avenues to forfeit assets of suspects: (i) proceeds of unlawful activities, (ii) instruments of unlawful activity, and (iii) conspiracies that injure the public. Of these, the third forfeiture proceeding is a proceeding unique to the state of Ontario.

Restraining Order Parts 2 and 3 of the Act empower the Superior Court of Justice, on application by the Attorney General, to issue statutory interlocutory order for the preservation of property, including a restraining order, possession and delivery or safekeeping of property, and appointing a receiver and manager of the property. The Superior Court will issue any of the above only if it is satisfied that there are reasonable grounds to believe that the property is proceeds or an instrument of unlawful activity and if it is in the interest of justice. Any of the orders above can be issued ex officio.

The Act also empowers the court to cover reasonable legal expenses to persons with an interest in the property subject to an interlocutory order, if it finds that he or she has disclosed all interests in other properties and they are not sufficient to cover the legal expenses incurred as a result of the proceeding. In practice, legal expenses are covered at the legal aid rate for civil lawyers in the province.

Forfeiture Order The proceedings for the proceeds of unlawful activities and instruments of unlawful activity are commenced with an application of the Attorney General (AG) of Ontario to the Superior Court of Justice. The court issues a forfeiture order if it finds that the property is the proceeds of unlawful activity, except where to do so would not be in the interest of justice. “Proceeds of unlawful activity “is defined in part 2 of the Act to mean property acquired, directly or indirectly in whole or in part, as a result of unlawful activity. Similarly, the Superior Court will issue a forfeiture order in relation to instrumentalities of crime (part 3 of the Act) if there is proof that property was used to engage in unlawful activity that in turn resulted in the acquisition of other property or serious bodily harm to any person, in the absence of evidence to the contrary. In regard to the property alleged to be an instrument of crime, the statute provides that the respondent is required to rebut the prosecutor’s statement to avoid forfeiture of the property. It is interesting to note that no such presumption is provided for property considered to be proceeds of crime. Further unlawful activity is defined to be any offense that is considered as such under an Act of Canada, Ontario, or other provinces and territories, or an act committed outside of Canada, that is an offense in Canada. This determines that property derived or used in an offense could be subject of a forfeiture order, be it a minor or a serious offense.

The Act targets only forfeiture of property located in Ontario, and does not provide for forfeiture of property in other provinces or territories, although it allows the forfeiture of property located in Ontario when it has resulted from an offense committed outside of the province. Further, the Act is retroactive, meaning that it can be applied regardless if an offense was committed prior to or after the Act came into force.

The statute has incorporated provisions to protect the interests of legitimate and responsible owners. A legitimate owner is defined in the Act as the person who has not acquired the property as a result of unlawful activity, has acquired it for a fair value and from a lawful owner. A responsible owner is defined

36 Available at: http://www.e-laws.gov.on.ca/html/source/statutes/english/2001/elaws_src_s01028_e.htm 37 See Part I of the Act. 38 Unlawful activity is defined in Part 2 of the Act to be “an act or omission that is (a) an offense under an Act of Canada, Ontario or another province or territory of Canada, or (b) is an offense under an Act of a jurisdiction of Canada, if a similar act or omission would be an offense under an Act of Canada or Ontario.”


Findings 23

as the person who has an interest in the property and who has done all that could reasonably be done to prevent the property from being used to engage in unlawful activity, including the duty to notify law enforcement agencies of the activity or refuse or withdraw permission that the person has the authority to give. The law established a statute of limitations of 15 years from the first day the property was acquired, after which proceedings to forfeit proceeds of crime cannot be initiated. No limitation is set for proceedings to forfeit property considered an instrument of unlawful activity.

Part 4 of the Civil Remedies Act provides for a forfeiture regime under the “conspiracies that injure the public,” whereas in a proceeding commenced by the Attorney General of Ontario, the Superior Court of Justice is authorized to issue any order that the court considers just if it finds that: “(i) two or more persons conspired to engage in unlawful activity; (ii) one or more of the parties to the conspiracy knew or ought to have known that the unlawful activity would be likely to result in injury to the public; and (iii) injury to the public has resulted from or would be likely to result from the unlawful activity” (s. 13). The “injury to the public” is defined in Part IV section12 of the Act to include “any unreasonable interference with the public’s interest in the enjoyment of property, unreasonable interference with the public’s interest in question of health, safety, comfort or convenience, and any expenses incurred by the public, including any expenses or increased expenses by the Crown of Ontario, a municipal corporation or a public body.” The court may also issue an order requesting a person to do or refrain from doing anything specified in the order, or to pay damages to the Crown in Ontario for any injury to the public. The court will presume that the defendant was engaged, over the period of 5 years, or conspired to engage in unlawful activity on at least two occasions from which activities an injury to the public was caused, unless the defendant adduces evidence to establish the contrary. Such orders will not be issued if a person claims a right to those damages or has initiated a proceeding seeking payment. The statute establishes a statute of limitations of 15 years from the date the cause of actions arose.

Property forfeited to the Crown, under any of the regimes outlined above, is paid to the special account known as the Consolidated Revenue Fund for special purposes. The Minister of Finance is authorized to make payments out of the account for purposes stipulated in the statute: “(a) to compensate persons who suffered pecuniary and non-pecuniary losses; (b) to assist victims of or to prevent unlawful activities; and (c) to reimburse expenses incurred by the Crown of Ontario, municipal corporation, or a public body, as a result of any proceedings under this Act”. There is no limit as to the extent of the costs that can be covered by this account. Claims for compensation are adjudicated administratively by independent adjudicators. Proceedings initiated under this Act are civil proceedings and findings of fact are made on the civil standard of proof, balance of probabilities. The court may find that an offense was committed, even if no person has been charged with the offense, or that the charge was made, but withdrawn, or the person was acquitted of charges.

The Attorney General is authorized to collect personal information on anyone to assist him in determining whether or not to initiate or conduct a proceeding under this Act or to enforce an order. The Attorney General will collect information by asking the person directly or in any other manner. Further, despite the Freedom of Information and Protection of Privacy Act and the Municipal Freedom of Information and Protection of Privacy Act and any confidentiality provisions, any person who has information that may be useful to the work of the Attorney General is obliged to disclose it. An exception is made in relation to personal health information of any person, unless an application by the Attorney General is made to the Superior Court of Justice in a hearing from which the public is excluded. The Attorney General enjoys immunity for any proceeding or action initiated under this Act.

Alberta

In Alberta, forfeiture is regulated by the Victims Restitution and Compensation Act39 (VRCA), enacted in 2001. According to the Act, an illegal act is any offense under the Criminal Code or the Controlled Drug

39 Available at: http://www.canlii.org/en/ab/laws/stat/sa-2001-c-v-3.5/latest/sa-2001-c-v-3.5.html


Findings 24

and Substances Act, or any offense carried out in contravention of any act in Alberta. Illegally acquired property is defined to be any property acquired directly or indirectly from an illegal act, including an increase in value of property or a decrease of debt paid from proceeds resulting from an illegal act (s. 3). An instrument of illegal activity is defined in section 3.1 to be property used or likely to be used in carrying out an illegal act, which, in turn, would result in or was likely to or was intended to result in property or in bodily harm to any person, and is realized from the same or other disposition of property derived from an illegal act.

The minister40or his designee is empowered to file an application to restrain and forfeit property in the civil courts. The proceedings are commenced with an application of the minister for any of the following purposes: (i) obtain restitution or compensation for property victims and other persons; (ii) remove financial incentives to commit illegal acts; (iii) prevent use of illegal property to carry out future illegal activities; and (iv) other purposes. The minister will initiate proceedings only after a peace officer or investigator has conducted investigations and has reasonable grounds to believe that an illegal act was committed and that the concerned property was acquired as a result of that act.

Proceeds of Unlawful Activity Property is restrained ex parte on an application by the minister supported by an affidavit providing grounds on which the belief that the property was acquired illegally, was based, including details related to the location and description of the property, the person believed to be in control or possession of the property, and the persons who may have an interest in the property, and the illegal act alleged to have been carried out. Further, the affidavit also may include information related to the victims (s. 4(2) of the VRCA 2001). The court granting the order prohibiting any person from dealing with the property will also appoint a civil enforcement agency to manage the property. The hearing date must be set within 45 days from the day a restraining order was made, to decide on the disposition of the property. The law also enables the state to restrain property for a short period of time up to 10days by a peace officer, if there are reasonable grounds to believe that the property was acquired by illegal means. Any person failing to comply with the peace officer’s direction is guilty of an offense and can be subject to a fine or imprisonment of six months or both.

Powers of the court are broad and include discretion to confirm or revoke the restraining order, return the property to the owner, provide compensation for actual loss incurred because of the restraining order, and vary any of the terms of the restraining order, release all or a portion of the restrained property and issue any ancillary order that the court considers appropriate. It is important to note that the court will grant an order to restrain concerned property even if no one has been charged with, found guilty of, or convicted of or held responsible for any illegal act in relation to the restrained property.

At the main disposal hearing, the minister bears the initial burden of proof to show that the restrained property was acquired by illegal means. The burden then shifts onto the respondent to establish the origin, nature, and the extent of his or her rights in property proving that he or she was not involved in the commission of the illegal act and, if the property was acquired after an illegal act, that he/she did not know and would not reasonably be expected to know that the property was acquired illegally (s. 13). An exception to the reversal of the burden of proof is provided when the respondent is the Crown or some other public body that incurred costs while protecting the safety or health of persons. If the minister is not able to satisfy the court that the property was acquired as a result of unlawful activity, the court may revoke the restraining order and compensate the respondent for the loss suffered (s. 14). If the minister satisfies the court, it will grant a property disposal order, ordering disposal of the property and payment to the Crown of the proceeds and payments for the purposes as defined by the statute, including payments made to the property victims or making payments of grants.

Instrument of illegal activity Similar to proceeds of illegal activity, the minister may commence an action if a peace officer has conducted an investigation and has reasonable grounds to believe that either 40 S 1 (b) of the Act defines that the Minister, means the Minister of Justice, Attorney General and includes any person acting on behalf of the Minister.


Findings 25

an illegal act was committed and that the property was used in carrying out the alleged act or that the illegal act resulted in or could likely result in acquisition of other property or in bodily harm to any person. Similarly to the proceeds proceeding, the application can be made ex parte on an affidavit of the minister providing sufficient details related to the description, location, and owner or possessor of the property.

Other steps in the procedure in regard to issuing the restraining order, interim actions of the peace officer and the disposal hearing, are identical to those under the proceeds of illegal activity. The standard of proof is the balance of probabilities. The Act does not require the minister to establish that anybody was charged with or convicted of an offense to satisfy the court that a property is proceeds or an instrument of unlawful activity. The minister has the burden of proof to show that it is likely that the property was derived as a result of illegal activity or was an instrument of such activity. The burden then shifts to the respondent to adduce evidence to the contrary. The respondent is given an opportunity before the main disposal hearing to adduce evidence establishing legal origin of his or her interest in the property, or can do so in the main hearing. Part two of the Act provides for restitution assistance post-conviction, ensuring that victims can be compensated and that failure to comply with these provisions can lead to fines and imprisonment.

Saskatchewan

According to the Saskatchewan Seizure of Criminal Property Act (SCPA) of 2005,41 amended 2009, the chief of police may apply to the court for a forfeiture order if he or she is satisfied that the property is proceeds or an instrument of unlawful activity. The application identifies the property and provides sufficient details to make it easy to identify it and name the owner of the property and any other person with an interest in the property. The proceeds of unlawful activity are defined in the Act to mean property acquired directly or indirectly, in whole or in part, as a result of unlawful activity; the instrument of unlawful activity means a property likely to be used in unlawful activity to acquire other property or to cause bodily harm to a person (s. 2 of the Act). A Court of Queen’s Bench may, on application by the chief of police, issue an interim order to preserve the value of the property, including a restraining order, possession and safekeeping of the property, appointing a receiver of the property, etc. An interim order can be issued ex officio for a period not to exceed ten days. A motion for extension of an interim order can be issued only if all parties are notified.

The court will issue an order forfeiting the property to the Crown if it finds that property is proceeds or an instrument of unlawful activity, unless it is not in the interest of justice. The standard of proof is a civil standard of proof. The burden of proof is shifted to the property owner. There is a statutory presumption that if the property is owned by a member of a criminal organization, a corporation if one of its directors or officers is a member of a criminal organization, or a person who has acquired the property for significantly less than its fair market value, is considered to be proceeds of unlawful activity, unless the contrary is established. Further, the Act defines the persons considered to be members of criminal organizations as those convicted of a criminal organization offense, if the person was found guilty, and even if the person was acquitted of an offense or if the charges were withdrawn or stayed. Similarly, the court will presume that a property is an instrument of an unlawful activity unless evidence is given to establish the contrary. This makes the respondent or the owner of the property responsible for presenting sufficient evidence at the court to establish that his or her property is not proceeds or an instrument of unlawful activity.

Protection from forfeiture is provided to legitimate owners. Forfeited property, if not in cash, shall be sold and its proceeds distributed to cover the costs of the Crown in the rights of Saskatchewan for expenses incurred selling the property, the chief of police for expenses incurred in bringing the application for forfeiture, and to any other entity for any other prescribed purpose. At the hearing, the police chief is 41 Seizure of Criminal Property Act of Saskatchewan, 2005, available at http://www.qp.gov.sk.ca/documents/English/Statutes/Statutes/S46-001.pdf


Findings 26

obliged to advise the court of all registered interest in the property or any other interest known to him or her.

The Act provides for an appeal of the forfeiture order to the Court of Appeal. The decision of the Court of Appeal is final and cannot be appealed.

Manitoba

Manitoba adopted the Criminal Property Forfeiture Act in 2004,42 introducing non-conviction asset forfeiture enabling the state to seize and forfeit assets that are considered to be proceeds or instruments of unlawful activities. The purpose of the Act is to prevent those engaged in unlawful activities from keeping property acquired as a result of unlawful activities as well as preventing them from using the property for commission of future unlawful activities.

The chief of police43 may apply to a competent court for an interim (restraining) or a forfeiture order. In the application he must provide sufficient details on the property, name the owner(s) of the property and any other person who may have an interest in the property. On motion by the police chief, the court may make an interim order to preserve property and notices must be sent to the owner and other persons with an interest in the property. The law provides that a Court must issue a forfeiture order, unless it would not be in the interests of justice to do so, if it finds that the property is proceeds or an instrument of unlawful activity.

The burden of proof is on the respondent to establish that the property sought to be forfeited is not proceeds or the result of illegal activities. There is a statutory presumption that all of the property owned by a member of a criminal organization, a corporation if a member of a criminal organization is one of its officers or director, or a person to whom the property was transferred for significantly less than its fair market value, is proceeds of unlawful activity, unless the respondent adduces evidence to establish the contrary. The Act also includes a statutory rebuttable presumption that a person is a member of a criminal organization if he or she has been found guilty or been convicted of a criminal organization offense. It is not relevant for the purpose of forfeiting a person’s property if the person was charged with and acquitted of an offense, or if those charges are withdrawn or stayed.

Similarly, statutory presumptions are established for instruments of unlawful activity. The court will presume that the property used to engage in unlawful activity resulting in acquisition of other property or in serious bodily harm to a person, is an instrument of unlawful activity, in the absence of evidence to the contrary.

The judge may issue special orders to protect people with an interest in property that is subject to forfeiture. Banks, credit unions, insurance companies, government, and some other interest holders are entitled to automatic protection, while others must prove to the judge that they did not know about the unlawful activity or did all that reasonably could be done to prevent the property from being used to engage in unlawful activity.

Forfeited property must be sold by the government after it has paid any costs the government incurred while selling the property and reimbursing the police for expenses incurred during the proceedings under this Act. The remaining funds are paid to the Victim’s Assistance Fund to support victim’s services or crime prevention programs and to the Legal Aid Services Society of Manitoba.

There are no limitation periods to bringing an application under this Act. The police chief or any other person acting under the authority of this Act enjoys immunity and no action can be brought against them.

42 The Criminal Property Forfeiture Act 2004, available at http://web2.gov.mb.ca/laws/statutes/ccsm/c306e.php 43 As defined in the Act, could be: (i) Chief of police of municipality of Manitoba; (ii) Commanding Officer of the Canadian Mounted Police in Manitoba; and (iii) special constable appointed under the Provincial Police Act in charge of police services for First Nations Communities


Findings 27

British Columbia

Following the other jurisdictions in Canada, British Colombia adopted in April 2006 the Civil Forfeiture Act, introducing non-conviction based forfeiture of unlawfully acquired assets and property. The Act in general mirrors the provisions of the Ontario and Manitoba Acts44, but differs in a number of areas (e.g., reduces the time limit for commencing a proceeding under this Act to 10 years, does not provide reimbursement of the respondent’s legal expenses, and sets clear guidelines for the court to determine what constitutes an unlawful activity and if the property constitutes proceeds of crime). In addition, the definition of the proceeds of crime is expanded to include not only the property that was created as a result of unlawful activities but also the decrease in debts that occurred soon after an unlawful activity was committed. The forfeiture proceeding is a civil proceeding, with a civil standard of proof on balance of probabilities, and all the rules governing civil proceedings apply. It provides for reversal of the burden of proof, shifting the burden onto the respondent to prove the legitimacy of assets subject to the forfeiture order. The act has retroactive power, meaning that it can be applied for offenses committed before the Act came into effect.

The person responsible for originating an application for a forfeiture order is the Director of the Civil Forfeiture Office, appointed under the Public Service Act, and designated by the Minister of Public Safety. The director may delegate responsibilities to a person or to a class of persons in writing, which includes the responsibility to initiate and conduct forfeiture proceedings, collect and manage information, etc.

On application by the director, the Supreme Court, if satisfied that the property in question is proceeds or an instrument of proceeds of unlawful activity, must issue a forfeiture order. If the court finds that it is not in the interest of justice to issue such an order, it may refuse to issue it, limit its application, or include limitations. A forfeiture order may be issued concerning all or part of the property or an interest in the property that was derived as a result of unlawful activity. The application must specify the owner of the property, referred to as the registered owner, as well as any other person who controls the property but is not the registered owner. Further, the director may apply and the court may issue interim preservation orders to preserve the value of the property, if there are reasonable grounds to believe that the property is proceeds of an instrument of unlawful activity, unless doing so would not be in the interest of justice. The court may issue protection orders to address property interest in instruments held by an “uninvolved property holder in instruments case.”

For a court to issue a forfeiture order it must make two determinations: (1) if an unlawful activity was committed, and (2) if the property constitutes the proceeds of crime. In determining if an unlawful activity was committed, the court will consider if the person was convicted, charged, and found guilty of an offense, although the court may find that an unlawful activity was committed even if no one was convicted, or found guilty, or if the person was charged but charges were withdrawn or stayed. A copy of the charge signed by an authorized person is sufficient admissible evidence for the court. After determining that an unlawful activity was committed, the court will proceed to determine whether or not the property is proceeds of such activity. The court will find that a property is proceeds if there is proof that a person participated in an unlawful activity that resulted in or is likely to have resulted in the person acquiring a financial benefit, unless the respondent is able to give evidence to establish the contrary. For the purpose of this Act the presumption of advancement does not apply to a transfer of property.

Money and the proceeds realized from the forfeited property are paid into a Civil Forfeiture Account and can be distributed by the director with the approval of the Minister of Finance for the following purposes: (i) compensation of victims; (ii) remedy of unlawful activities; (iii) prevention of crime; (iv) administration of this Act; and (v) any other purpose.

44 See generally James McKeachie and Simser, Jeffrey, “Civil Forfeiture in Canada” in Young, Simon, ed., Civil Forfeiture of Criminal Property: Legal Measures for Targeting the Proceeds of Crime (Edward Elgar Publishing, Inc.: Northampton, MA, 2009)


Findings 28

Quebec

Quebec’s Act Respecting the Forfeiture, Administration and Appropriation of Proceeds and Instruments of Unlawful Activity, 2007,45 introduced a non-conviction based asset forfeiture of property derived from or used to engage in unlawful activity. Note that Quebec has a civil law tradition that differs from the common law tradition of the other provinces, although it appears that the civil forfeiture regime has been modeled after common law models, such as that in Ontario46. Proceedings are governed by the rules of the Civil Procedure Code and rules of evidence are those applicable in civil matters. The overall responsibility for administration of the Act is vested in the Minister of Justice.

The Act has a dual purpose47: (i) to provide for forfeiture of property derived from or used to engage in unlawful activity so that the persons who, in whatever capacity, hold rights in such property or use such property are not allowed to keep the resulting benefit, unless they are in good faith, and (ii) to provide for the administration of forfeited, seized, or restrained property under federal laws and to allow for the disposition of such property for socially useful purposes, such as assisting victims of crime as well as the prevention, detection, and repression of crime. Unlawful activities are offenses under the Criminal Code, chapter C-46, the Controlled Drugs and Substances Act (CDSA) (chapter 19), and offenses under Schedule 1 of this Act. This Act is applicable only to property located in Quebec.

Proceedings are initiated by the Attorney General, who may apply to a court for a forfeiture order of whole or part of the property that is considered to have been derived from or used to engage in unlawful activity. The same provision provides that the Attorney General also may apply for an incidental application requesting the court to declare rights in the forfeited property unenforceable because of their fictitious or simulated nature. For the court to issue a forfeiture order, it must be convinced that the property is the proceeds or an instrument of unlawful activity; to issue an order to forfeit an instrument of unlawful activity, the court also must be convinced that the owner participated or was aware that the property was used to engage in such activity or could not reasonably have been unaware that the property was used in such activity. The statute adds another standard if unlawful activities include offenses listed in Schedule 1. In that instance, the court must be convinced that the activity resulted in substantial economic gain for the owner, possessor, or holder. Offenses listed under Schedule 1 include environmental consumer protection, labor relations, and others. This was held to be a safeguard, as designated offenses do not have the same gravity as offenses under the Criminal Code; requiring the proof of substantial economic gain will temper the use of these provisions.48

The statute enables law enforcement to take away property that is held, owned, or possessed by persons close to the property holder/respondent, such as blood relatives up to the second degree, spouse, and those living with the person.

The statute contains a statutory presumption that a property identified in the application derives from unlawful activity if the “defendant’s legitimate income is significantly disproportionate to the defendant’s patrimony or lifestyle or both.”49 Despite the resemblance to the unexplained wealth provisions of the Australian Civil Forfeiture Acts, it differs substantially from them in that its application is further conditioned with the following provisions:

45 Available online at: http://www2.publicationsduquebec.gouv.qc.ca/dynamicSearch/telecharge.php?type=5&file=2007C34A.PDF, accessed March 2, 2011 46 See generally James McKeachie and Simser, Jeffrey, “Civil Asset Forfeiture in Canada” in Young, Simon, ed., Civil Forfeiture of Criminal Property: Legal Measures for Targeting the Proceeds of Crime (Edward Elgar Publishing, Inc.: Northampton, MA, 2009). 47 Division I of the Act Purpose and Scope 48 See James McKeachie & Simser, Jeffrey, “Civil Forfeiture in Canada” in Young, Simon, ed., Civil Forfeiture of Criminal Property: Legal Measures for Targeting the Proceeds of Crime (Edward Elgar Publishing, Inc.: Northampton, MA, 2009) 13 at 13 49See s. 11. of the Act


Findings 29

1) frequently participates in unlawful activity likely to result in personal economic benefit; 2) participates in the unlawful activity of a criminal organization within the meaning of the

Criminal Code or acts in association with such an organization; or 3) is a legal person one of whose directors or officers participates in the unlawful activity of a

criminal organization within the meaning of the Criminal Code or a legal person in which a person who participates in such activity holds a substantial interest.

4) A person convicted of a criminal organization offense within the meaning of the Criminal Code is presumed to participate in the unlawful activity of or to act in association with a criminal organization.

It is held that proving participation in criminal organization will be more challenging for the prosecution. Criminal Code defines the criminal organization to be:

Criminal organization means a group, however organized, that Is composed of three or more persons in or outside Canada, and Has one of its main purposes or main activities the facilitation of commission of one or more

serious offenses that, if committed, would likely result in the direct or indirect receipt of a material benefit, including a financial benefit, by the group or by any of the persons who constitute the group.50

Statutory presumptions are based on predicate offenses, meaning that presumptions will come into effect or be applied only if a person has been convicted for an offense indicated in Schedule 1 of the Penal Code or has been convicted of a criminal organization offense. The statute is silent about whether or not the burden in these cases shifts to the property owner to show the legitimacy of the property.

The statute has incorporated provisions to protect the rights of good faith owners or possessors if the nature and extent of their rights is specified in the application of the Attorney General. Further, the statute stipulates that proceeds of unlawful activity retain their nature regardless of who is their owner or possessor, unless the owner is able to establish that he or she was not or could not have reasonably been aware of unlawful origin of the property.

Seizure orders The Attorney General may apply for authorization to seize property, at any time during or even before the proceedings, if he or she has reason to believe that forfeiture of the property would otherwise be jeopardized, or that the property may be destroyed or severely damaged. The application is supported by an affidavit affirming that the property is proceeds or an instrument of unlawful activity and stating facts giving rise to the seizure.

Administration and management of property The statute contains provisions on the administration and management of proceeds and instruments of unlawful activity. Administration and management of seized and forfeited property under the statute is entrusted to the Attorney General, who in turn may designate another person to administer the property. The Forfeiture Act also grants the Attorney General legal authority to administer and deal with property that is either forfeited civilly or seized and restrained under a federal statute. Quebec and the federal government have found it necessary to pass statutes in this regard.51 There are also provisions addressing forfeited money and its relationship to the consolidated revenue fund.

Nova Scotia

Nova Scotia passed its Civil Forfeiture Act in December 2007, largely mirroring the provisions of the Ontario and British Columbia Acts. The purpose of the Act is to prevent persons who engage in unlawful 50 See generally James McKeachie & Simser, Jeffrey, “Perspectives on Civil Forfeiture” in Young, Simon, ed., Civil Forfeiture of Criminal Property: Legal Measures for Targeting the Proceeds of Crime (Edward Elgar Publishing, Inc.: Northampton, MA, 2009) 13 at 13. 51 See the Seized Property Management Act 1993 (federal) and the Law Enforcement and Forfeited Property Management Statute Law Amendment Act 2005 (Ontario)


Findings 30

activities and others from keeping property acquired as a result of unlawful activity and preventing property from being used to engage in unlawful activity. The definition of the instrument and the proceeds of unlawful activity is similar to those in the British Columbia Act (see above). The Act empowers the Supreme Court to freeze and forfeit proceeds and instruments of unlawful activities in a civil proceeding. The Management Assets and Disposition Act of 2007 establishes an entity, the “manager of assets,” who can bring civil forfeiture proceedings to a court and who can manage property that is the subject of civil or, in some cases, criminal proceedings. There is a statutory protection for uninvolved interest holders based on an interest of justice test. The court has the authority to refuse to issue a forfeiture or preservation order if it finds that it is not in the interest of justice to do so.

Public Debate in Canada

As the first jurisdiction to introduce non-conviction based asset forfeiture statutes, the debate surrounding introduction of the statute in Ontario was heated and intense. Its supporters held that the statute is necessary and crucial in dismantling serious and organized crime as well as in acting as a deterrent for future criminal activities. In contrast, its opponents, including lawyers and publicists, expressed their grave concerns in relation to the Act. One of the areas of concern was that easing the burden of proof from beyond reasonable doubt to civil burden of proof will infringe on civil rights; it enables the state to more easily seize and forfeit property; and it has an imminent potential to abuse the rights of innocent people. Opponents further contended that according to the Canadian constitution, criminal law is the responsibility of the federal government, and that, therefore, adoption of non-conviction based forfeiture laws targeting proceeds of crime is encroachment on federal law. First, it is considered that it encroached on the federal government’s responsibility to legislate criminal law; second, it was a matter of criminal conduct in a civil proceeding, and third, it violated the presumption of innocence. The principle of presumption of innocence was violated on two grounds. One, by labeling the proceedings “civil,” it reduced the standard of evidence to civil standards of proof thus it required convincing a judge on a civil standard of proof that it is more likely than not that a person has committed an offense, which could be major or minor, for the court to issue an order forfeiting any person’s property to the state.52 Two, the burden of proof is no longer on the state to show that a property is the proceeds or an instrument of an offense. Therefore, the statutes include a presumption of guilt requiring the defendant to prove innocence to retain his or her property.

Serious concerns were raised in regard to the broad and far-reaching powers of the Act. Specifically, the state forfeiture of property could be ordered for unlawful activities. In the Act, unlawful activities are defined to include anything that constitutes an offense under any federal or provincial law, from minor crimes to serious organized criminal activities. The individuals who drafted the Act expressed that the definition of unlawful activities in the state was purposefully left broad to enable the state to capture proceeds and instruments used for commission of an offense.

The law also was criticized for the risk it presents to possibly deprive innocent people of their assets, if they cannot in a timely manner provide sufficient evidence or if they cannot meet the high standards of evidence set by the Act. For example, according to the responsible owner clauses of the Act, an innocent property owner whose child sells drugs from his or her room of the same property, risks losing the property, if the property owner fails to do anything, such as notify the police of the activities going on his or her house. In this case, it may mean reporting one’s own child. Considerable attention was paid to the potential abuse of power by law enforcement officials in issuing forfeiture orders, motivated by various incentives, increased budgets, promotions, and so on.

In a paper produced for the Law Commission of Canada in April 1999, Professors Margaret E. Beare and R.T. Naylor of York University’s Nathanson Centre for the Study of Organized Crime and Corruption concluded “Although the entire notion of controlling crime by taking away the capital and the motivation 52 Karen Slick, “Civil Remedies Act Will Harm the Innocent and Corrupt the State” September 3, 2009 http://www.karenselick.com/CCF090903.html accessed February 2011,


Findings 31

is superficially appealing, there is no proof in logic or in practice that it actually works. There is, however, ample proof that it can pose a threat to civil liberties and civilian control over police forces”53

Non-conviction based forfeiture acts and Canadian case law

The Canadian constitution vests the federal government with the power to legislate and enforce criminal law, including establishment of the criminal court, while the property and civil rights are vested in the provincial governments. Critics of non-conviction forfeiture statutes often have criticized the provincial governments to legislate criminal matters, holding that they are infringing on the federal government’s authority.

The constitutionality of the non-conviction based asset forfeiture statutes was challenged and upheld by the Supreme Court of Canada in Chatterjee v. Ontario54contending that Ontario’s Civil Remedies Act (CRA) providing for forfeiture of property considered to be proceeds or an instrument of crime is ultra vires provincial jurisdiction and as such does not violate the federal government’s criminal law powers. The appellant, Mr. Chatterjee, was stopped by the Ontario police for a routine traffic violation. Information revealed that he was in breach of a probation order and a search of his car incidental to the arrest, discovered cash ($29,020) and items that could be associated only with the illicit drug trade, that the car smelled of marijuana, but no drugs were found. The respondent was never charged with any offense in relation to the money, items, or with any drug-related activity. Money and equipment were seized and a forfeiture order was granted.

In the lower courts, the appellant contended that the forfeiture law was ultra vires provincial jurisdiction and also infringed on rights guaranteed by the Canadian Charter of Rights and Freedoms. But at the Supreme Court of Canada, the appellant focused his appeal on the grounds that the CRA forfeiture provisions were ultra vires the province because they encroach on the federal criminal law power. The Supreme Court upheld the constitutionality of the CRA and its power to forfeit tainted property.

The court portrayed the appellant’s arguments as based on “an exaggerated view of the immunity of federal jurisdiction in relation to matters that may, in another aspect, be the subject of provincial legislation.” Reference also was made to a decision in a recent case, Canadian Western Bank v. Alberta, 2007 SCC 22, (2007) 2 S.C.R. 3, where e federalist concept of proliferating jurisdictional enclaves is discouraged. In this case the court held that “courts should favor, where possible, the ordinary operation of statutes enacted by both levels of government.” The court held that the CRA was enacted to deter crime and compensate victims, and that the former goal is broad enough that both levels of government can pursue it. The court further held that the effects of crime affect the federal level as well as the provincial levels of the government. In addition, the court held that CRA is an in rem forfeiture of proceeds and as such differs from criminal law, which in addition to a prohibition issues a penalty. CRA proceedings do not involve an allegation that a person committed an offense, are not tied to charging, convicting, or punishing an offender, and do not impose penalty, punishment, or imprisonment. The court further held that “the provincial CRA does not conflict with the Criminal Code,” and that the Parliament expressly preserved such remedies in section II of the Criminal Code.

Another aspect of the Act was challenged at court when the respondent argued that a restraining order in relation to possible proceeds of crime impacted the respondent’s right to a fair trial because it implies an involvement in crime. However, the court in Canada, in R v. Trang, held that the essence of a restraining order was to impose a temporary restraint on property while issues were determined and that an application for a restraining order was not part of the criminal trial against the defendant.

53 See also: http://www.karenselick.com/NP001207.html 54Chatterjee v. Ontario (Attorney General), 2009 SCC 19 (2009) 1 S.C.R. 624


Findings 32

In Turner v. Manitoba,55 the court was asked to consider a charter challenge to the provisions of the Wildlife Act that provided for the mandatory forfeiture of items used in the commission of offenses under the Act. The court concluded that forfeiture was not cruel and unusual punishment under section 12 of the Charter, and cited the decision reached in R v. Porter.56 In that case the court held that while forfeiture could be considered punishment, it was not cruel and unusual. The court noted that the thrust of cruel and unusual was directed to physical and emotional constraints of the person and not to the individual’s financial or property loss.

However, the case law has defined a two-prong test in establishing that a property is an instrument of unlawful activity. In Attorney General of Ontario v. Marijuana Growing Equipment et al.,57 an application was brought against real property used in an outdoor marijuana-growing operation, on the basis that the real property was an instrument of unlawful activity. One of the owners admitted during cross examination that she had been running a marijuana-growing operation, on which occasion the court established that the first test was met, that the property was an instrument of a crime. The second part of the test was the acquisition of other property, which was easily met because the owner sold marijuana for profit.

R. v. Buhay58 is a leading Supreme Court of Canada decision on the Charter rights protecting against unreasonable search and seizure (s. 8) and the criteria for the exclusion of evidence under section 24(2). The court held that for evidence to be excluded on the Collin test, the seriousness of the breach must be determined by looking at factors such as good faith and necessity. On the facts, marijuana found in a bus station locker was excluded from evidence because the police had insufficient reason to search it without a warrant.

New Zealand

New Zealand introduced the Criminal Proceeds (Recovery) Act in 200959, replacing the Proceeds of Crime Act of 1990. The new law, while retaining conviction-based forfeiture of instruments of crime as provided for in the Proceeds of Crime Act of 1990, introduces non conviction–based forfeiture of other property representing the proceeds of crime. The Attorney General’s office vetted the Act with the New Zealand Bill of Rights Act of 1990.

The main purpose of the Act, as stipulated in Part 1, is to establish a regime for the forfeiture of property, derived directly or indirectly from significant criminal activity, or that represents the value of a person’s unlawfully derived income. The intent expressed by the legislators are multipurpose and are intended to: (i) eliminate chances for those undertaking unlawful activities to retain the acquired profit; (ii) deter significant criminal activities; (iii) reduce the chances to reinvest the profit in new criminal activities; and (iv) deal with foreign restraining and forfeiture orders.

The law clearly states that all proceedings related to restraining and forfeiture orders under this Act are civil proceedings in nature and that the civil standard of evidence applies. The Act contains detailed provisions on the restraining, forfeiture, and registration of foreign forfeiture orders.

Restraining Order Part II of the Bill (s. 24–26)—provides for restraining of property, which has the effect of prohibiting the person subject to an order from disposing of or otherwise dealing with the property. The Act differs from other Acts in that it divides the responsibility for filing an application for a restraining order between the commissioner and the prosecutor. The commissioner is authorized to apply for a restraining order when the property is considered to be tainted property and or profit derived as a

55Turner v. Manitoba, 2000 MBWB 94 56R v. Porter, (1989) 26 FTR 69 57Ontario v. Marijuana Growing Equipment, 58 R. Buhay,2003] 1 S.C.R. 631,2003, SCC 30 59 Criminal Proceeds (Recovery) Act 2009, No8 available at; http://www.legislation.govt.nz/act/public/2009/0008/latest/DLM1451001.html


Findings 33

result of unlawful activities. The prosecutor is authorized to file a restraining order for property that is considered to be an instrument of crime.

The statute empowers the Commissioner of Police to apply and the High Court (s. 24) to issue a restraining order related to specific tainted property, even if there is no respondent, if they are satisfied that there are reasonable grounds to believe that the property is tainted. Tainted property is defined in the Act to be any property that has in whole or in part been acquired as a result of significant criminal activity. Similarly, the Commissioner of Police applies for and the High Court (s. 25) issues a restraining order if they are satisfied that there are reasonable grounds to believe that the respondent has unlawfully benefited from significant criminal activity. Significant criminal activity has been defined to mean (s. 6) “that if proceeded against the respondent; the offense would amount to offending that consists of one or more offenses punishable by a maximum term of imprisonment of 5 years or more and proceeds of which exceed the value of $30,000.” It is presumed that a person has undertaken such activity if the person was charged and convicted of an offense in connection with the activity, or if the person has been acquitted or if his or her conviction has been quashed or set aside.

On application by the prosecutor (s. 26), the High Court, after a hearing, may issue a restraining order related to an instrument of a crime if the circumstances are that: (i) the respondent has been charged with a qualifying instrument forfeiture offense or (ii) the court is satisfied it has reasonable grounds to believe that the property referred to in the application is an instrument of crime used to facilitate the qualifying instrument forfeiture offense. It also may issue a restraining order if the court is satisfied that there are reasonable grounds to believe that: (i) the respondent will be charged with a qualifying instrument forfeiture offense within 48 hours; and (ii) the property referred to in the application is an instrument of crime used to facilitate that qualifying instrument forfeiture offense. Instrument forfeiture offense is defined to be an offense punishable by a maximum term of imprisonment of five years or more and includes an attempt to commit, conspire to commit, or be an accessory to an offense if the maximum term of imprisonment for that attempt, conspiracy, or activity is five years or more.

The statute authorizes the court issuing the restraining order to issue ancillary orders, providing for reasonable living costs of the respondent or his or her defendants, reasonable business expenses, or payment of any debt out of the restrained property to be paid out of the restrained property.

Safeguards are incorporated in the statute, protecting the interest of innocent third parties if the applicant proves on the balance of probabilities his or her interest in the property, and that he or she has not benefited from unlawful activity or was not involved in the commission of the offense. In addition, the court may issue other ancillary orders as it deems fit, including orders directing the official assignee to control the restrained property, preserve its value, make mortgage payments, and so on. The restraining order lapses either at the end of 1 year from the day the order was issued or when a decision on the forfeiture order is made, whichever takes place first. The restraining time period related to property considered an instrument of crime expires at the end of the 48-hour period, if the defendant is not charged with an offense.

Forfeiture orders The commissioner may apply to the High Court for two types of forfeiture orders: (i) Asset Forfeiture order and (ii) Profit Forfeiture order. Application for a forfeiture order can be made ex parte if approved by the High Court, in which case the court may direct the applicant to notify the respondent as well as any person with an interest in the property as soon as practicable.

Asset Forfeiture Order The commissioner filing an application for an asset forfeiture order is required to provide sufficient details in the application on the property that is alleged to be tainted property, grounds on which the belief that the property is tainted is based, and the name of the respondent and any third party with an interest in the property. The High Court must issue an asset forfeiture order if it is satisfied on the balance of probabilities that specific property is tainted. However, the statutes provide that if there are no respondents who have claimed ownership or interest in the property, the court may not issue a forfeiture order unless the court is satisfied, on the balance of probabilities, that a restraining order was


Findings 34

issued earlier in regard to the same property, that the restraining order has been in place for one year, and that the commissioner has contacted or has made reasonable efforts to notify all persons who may have had an interest in the property.

In addition, the High Court may, on an appeal from the respondent, grant an exclusion order, excluding part of the property or an interest in the property from the forfeiture order, if it believes that the respondent will suffer undue hardship if the property is included in the asset forfeiture order.

Profit Forfeiture Order. Similarly to the asset forfeiture order on an application of the commissioner the High Court must issue a profit forfeiture order if it is satisfied that the respondent has unlawfully benefited from significant criminal activity. The commissioner is required to provide sufficient details to satisfy the court on the following elements: (i) the respondent was involved in, and benefited from, significant criminal activity within 7 years from the day the application was made; (ii) specify the value of the benefit; and (iii) identify the property in which the respondent holds interest and the nature of those interests. Then the court will presume that the respondent has benefited from a significant unlawful activity, which presumption may be rebutted by the respondent on the balance of probabilities. It appears as after the commissioner discharges hid burden of proof, the burden shifts to the respondent to rebut the commissioner’s claims.

The court is expected to specify the maximum recoverable amount to be forfeited, by either considering the amount specified in the application or by seeking an independent valuation of the property by a third-party expert. The statute also provides that the court will treat effective control over property as an interest in the property.

Within six months after the forfeiture order is issued, or at a later stage, any other person with an interest in the property may apply for relief for special reasons. Special reasons may include the following: the applicant had a good reason for failing to attend the hearing of the application for a non-conviction forfeiture order or if new evidence was not reasonably available at the time of the hearing. The court may issue an order for relief from non-conviction based forfeiture order on grounds of undue hardship.

Instrument Forfeiture Order On application by the prosecutor, the District Court may issue an instrument forfeiture order if it is satisfied that the property was used to commit or to facilitate the commission of a qualifying forfeiture offense, being an offense punishable by a maximum term of five years of imprisonment or more.

Until the appeal period has expired, unless a court has granted leave, the property forfeited under the instrument forfeiture order cannot be disposed of or otherwise dealt with on behalf of the Crown. Only after the appeal period expires or a final decision on the appeal has been made, can the official assignee dispose of the forfeited property.

If a court issues an instrument forfeiture order as part of the sentence imposed on a person convicted of a qualifying instrument forfeiture offense, and the conviction is subsequently quashed, the quashing of the conviction discharges the instrument forfeiture order. In that case the official assignee is required to transfer the property to the former owner or to pay the person an amount equal to the value of the person’s interest in the property.

Another instrument available is the prohibition of double benefit, which means that if an application for relief is made under Sentencing Act 2002 regarding an interest in property, an amount equal to the amount must be deducted from any amount required to be paid under section 74(3)(b) to that applicant in respect of that interest. Protection safeguards are incorporated in the statute to protect the interest of the third parties.

Property management An official assignee is required to preserve the value of the restrained property under his or her custody and control. In addition, the official assignee may be a part of civil proceedings


Findings 35

affecting the property, ensuring property, and realizing or otherwise dealing with securities of investments and doing anything necessary to carry on the business.

Investigative powers The Commissioner of Police is in charge of investigation and may appoint any person to conduct an investigation of the affairs, or an aspect of the affairs, or execute a search warrant.

It is relevant to note that the Commissioner of Police and the Commissioner of Inland Revenue Services are both authorized to have a written agreement on information exchange between the two entities. However, limitations are imposed as to whom the information may be disclosed to, limiting it to the authorized person, to the person for whom the information was obtained, and to any person in connection with the proceedings taken under this Act. If no proceeding is to be initiated, the Commissioner of Police is required to destroy all information obtained.

The statute authorizes the commissioner to apply to a judge for a search warrant, production and examination order60 if the commissioner has reason to believe that a person has access to documents relevant to an investigation. Applications are made in writing, specifying the grounds on which they are based and describing the documents and the property.

The commissioner applies and the judge issues an examination order if satisfied that the commissioner has reasonable grounds to believe that a person has information that is sought through the order. A person subject to an examination order is required to appear before the commissioner, answer questions, and supply information specified in the notice. The person subject to the examination order is allowed to be accompanied by a lawyer. Any disclosure of information under this Act, if made by any of the above orders, is not considered to constitute a breach of an obligation of secrecy or non-disclosure.

The approach taken by New Zealand empowers the official assignee, as property manager, to apply to a court for a search warrant to search any place or thing if the official assignee believes that there are grounds to believe that the property proposed to be under the restraining order is in or on the place or thing, or will come into or onto the place or thing. Any person who fails to comply with a search warrant, production, or examination order commits an offense and is liable on indictment to imprisonment for a term not exceeding 1 year or a fine not exceeding $15,000, or if it is a corporate body, to a fine not exceeding $40,000.

Further, the commissioner is authorized to settle with any person related to the property subject to a forfeiture order. However, settlement agreements have a binding effect on parties only if they are approved by the High Court. The High Court must approve settlement if it is satisfied that it is consistent with the purpose of the Act and is in the interest of justice.

South Africa

Forfeiture of the proceeds of crime was introduced in South Africa for the first time in 1992 in the Drug Trafficking Act. As a conviction-based regime, it allowed forfeiture of assets derived from drug-trafficking offenses. Although the drug-trafficking offenses were tried in criminal proceedings with the criminal standard of proof, beyond reasonable doubt, proceedings in which assets were forfeited were civil with a civil standard of proof, balance of probabilities. This regime was expanded with the Proceeds of Crime Act in 1996, allowing forfeiture of the proceeds derived from any offense, after the defendant was convicted. However, it was not until 1998 that a full-fledged non-conviction based (civil) asset forfeiture provisions was introduced with the Prevention of Organized Crime Act (POCA61) in 1998.

The POCA retained the conviction-based forfeiture (Chapter 5) introduced by the two earlier pieces of legislation and introduced a non-conviction–based regime (Chapter 6) aimed at the proceeds of unlawful

60 Defined supra, at s.102, 104 & 106 of the Act 2009. 61 Prevention of Organized Crime Act (POCA ), Act No.121 1998


Findings 36

activities62 and the instrumentalities of crime. To ensure implementation and to strengthen the use of POCA, the South African legislature established a specialized agency—Asset Forfeiture Unit (AFU)—under the National Prosecuting Authority (body established after 1994) headed by the National Director of Public Prosecutions (NDPP). Implementation of POCA was significantly affected by enactment of the Bill of Rights soon after. The Bill of Rights serves to protect individual rights, including the protection to private property, right to equality, and the right to freedom and security of persons. Conversely, the constitution imposes a positive duty on the state, including the AFU and NDPP, to protect, promote, and respect these rights. This created a tension between the public interests served by asset forfeiture and the private interests directly affected by it. However, despite extensive litigation, none of the provisions of the POCA 1998 have to date been declared unconstitutional.

South Africa’s POCA is modeled after the U.K.’s Criminal Justice Act of 1998, and South African courts have over the years relied on the decisions and elaborations of the courts in the U.K.63

Criminal asset forfeiture under Chapter 5

Forfeiture of the proceeds derived from an offense, after a defendant’s conviction, is governed by the provisions of Chapter 5 of POCA, commonly referred to as criminal forfeiture. The proceedings are governed by the rules of civil procedure and the civil standard of proof is applied, “preponderance of evidence.”64According to Chapter 5 of POCA, proceeds that have derived from any offense can be subject to forfeiture, including individual “ordinary” and organized crime offenses such as racketeering and criminal gang activities (Chapter 3 of POCA). Confiscation proceedings may be conducted in parallel with the main trial or after the defendant has been sentenced, if the court is convinced that inquiries will unreasonably delay the main trail, or with the request of the public prosecutors, to delay the proceeding until after the sentence. The proceedings may be held in front of the same judge hearing the main trial against the defendant, depending on the judge’s availability.

Provisions of Chapter 5 stipulate that on the prosecutor’s application, the court convicting the defendant can inquire if the defendant has derived any profit from the offense for which he or she is being tried, or any other offense for which the defendant has been convicted at the same trial, or other criminal activities that the court finds to be sufficiently related to the offenses of which the defendant was convicted. The prosecutor’s application to initiate inquiries of the defendant’s benefits must be approved by the National Director.65 In inquiring and determining that the proceeds are the proceeds of crime, the court will consider evidence presented at the main trial, as well as other evidence the court may consider necessary. The court also may order the prosecutor to submit to the court a statement in writing under oath on matters pertaining to determination of the value of the defendant’s proceeds (Article 21.(1)(a)). A copy of the statement is required to be sent to the defendant 14 days before the statement is sent to the court. The defendant has the right to dispute allegations made in the statement and present the grounds for dispute. If the defendant does not dispute the statements, the court shall consider the statements as conclusive proof.

The court also may request the defendant to submit a statement in writing to the court under oath on any matter related to the determination of the amount that may be realized (Article 21(3) (a)). Similarly, the court will request the defendant to submit a copy of the statement to the public prosecutor 14 days before the statement is presented to the court. The court’s order to the defendant to submit a statement can be considered as partial reversal of the burden of proof to the defendant, during the proceeding. The article highlights that the defendant’s statement can be on any matter related to the matter involved, which is the

62 Section 6 of Prevention of Organized Crime Act (POCA), amended in 2004, also covers “property associated with terrorist and related activities” 63 “Phillips, whereby the court relied on the decision of Her Majesty’s Advocate v. McIntosh (2001) All ER (D)”—Asset Forfeiture in South Africa Raylene Keightley 64 Chapter 5 of POCA, Provisions 13 (1), (2), (3) 65 In the text of the Statute it is stated the National Director which is further defined in the preamble to include any functionary in the National Prosecuting Authority


Findings 37

defendant’s property. Subsequently, the defendant’s statement will present relevant facts or evidence that would establish the legitimacy of the concerned property.

Similarly, Article 22(2)(b) provides that if the court is conducting an inquiry into a defendant’s property for the purpose of issuing a restraining order, has requested from the defendant to disclose facts related to any property over which he or she may have effective control and the location of such property (section 26(7)), and the defendant fails to disclose such facts or furnishes false information, the court also will accept these facts as prima facie evidence that the property represents the proceeds of unlawful activities. Therefore, if the defendant fails to disclose facts related to his or her property and is asked to do so by the court, the court will interpret this as an admission that the concerned assets were derived from an offense. If the court finds that the defendant has benefited from the offense, in addition to the imposed sanction, the court will order the defendant to pay a set amount of money to the state. For the court to determine whether or not the defendant derived any profit, and its extent, it will inquire whether the defendant has had any legitimate source of income from which he or she could have acquired assets or property (article 22(3)(a), (b)). If the court finds that the defendant has not had legitimate income over the fixed period to justify legal origin of the property, the court will accept this as prima facie evidence that the property represents the proceeds of crime. The defendant has the opportunity to rebut this presumption by presenting new evidence to the court to justify his or her sources of legitimate income.

If the court determines that the defendant has benefited from an offense, the amount to be forfeited cannot be higher than the value the defendant has acquired from the offense. Although the status determines the upper limit above which no forfeiture order can be issued, it is left to the discretion of the court to determine any appropriate amount below the upper limit. Thus, the court will seek to issue a forfeiture order that is rationally connected to the purpose sought to be achieved by that order. In this regard it has been held in Sheikh66that it is intended to ensure a defendant disgorges the fruits of his or her criminal conduct, as well as to act as a deterrent. Further, in the same case, the court held that not only direct but also indirect benefits can be subject to forfeiture, including benefits derived by a shareholder of a company that was enriched through the shareholder’s criminal activity. If it is found that the defendant has benefited from an offense, section 22(3) provides that all property held by the defendant at the time of conviction or 7 years before the prosecution was initiated, all property held and all expenditures incurred during that period, was derived from, or met out of the proceeds of the defendant’s unlawful activities. The burden is then placed on the defendant to rebut these presumptions. The presumptions were held to be “unobjectionable” by the High Court in Phillips,67 where it was noted that although the defendant had raised constitutional objection to the presumptions in the affidavit filed at court, the matter was not pursued in argument before the court. To date, this presumption has not been challenged by either the Constitutional Court or the SCA.

If the defendant has died or absconded after conviction and the court believes there are reasonable grounds that a confiscation order would have been issued if the defendant were alive, the court will, on the application by the National Director, inquire whether or not the defendant acquired any profit from an offense. If the court finds that the defendant benefited from an offense, a confiscation order will be issued.

Pending a conviction or confiscation order, to preserve the property and its value, the court may issue a restraining order. The application for a restraining order will be made by the National Director, prohibiting any person affected by the order from dealing in any manner with the property to which it applies. A restraining order will be granted over realizable property as specified in the restraining order, or over all property transferred to the defendant, as well as any property held by any third party who may have received affected gifts from the defendant. The court also may order the defendant to disclose any other assets unknown to the court. A restraining order can be issued before the criminal proceeding against the defendant has started, if the court is satisfied that the defendant will be charged with an

66Shabir Shaik and Others v. The State, Case No. 248/06 (2006) ZASCA, 6, November 2006 67NDPP v. Phillips and Others, 2002 (4) SA 60 (W)


Findings 38

offense and if there are reasonable grounds to believe that a confiscation order may be issued.68 The restraining order may be varied or rescinded, either at the request of the defendant or by the court if it deems it is in the interest of justice. Further, if the court is satisfied that the person whose property was restrained, or that his or her family will face undue hardship, it will make such provisions to cover reasonable living expenses. Similar provisions can be made to cover reasonable legal expenses in connection with any proceeding instituted against the defendant.

To prevent any realizable property from being disposed of or removed, the court may order the seizure of such property. The seized property then will be placed under the care of the curator bonis, who will be responsible for its administration and management until a final decision is made by the court. The decision on seizure may be rescinded or varied on the application by the defendant or any third party with any interest in the property.

Realization of property is initiated by the court if the defendant fails to satisfy a confiscation order and which is executed against the affected property. The court, on the application by the National Director and after the proceedings against the defendant are concluded and no appeal is filed, appoints a curator bonis to conduct realization of the realizable property. Realizable property is any property held by the defendant as well as any property held by a third party who may have received gifts from the defendant. This has been interpreted to include properties not held by the defendant, owned by a third party, if there is evidence that the defendant has an interest in it. Broader interpretation of the provision was applied to include properties that are in reality owned by the defendant but have been transferred to a third party to avoid confiscation. The law provides that no realization of the property will be made until the claims of third parties with any interest in the property are satisfied. The court-appointed curator bonis will be responsible for realizing the property and making any realized payments to the state.

Non-conviction based asset forfeiture–Chapter 6

The introduction of non-conviction based (civil) forfeiture regime in South Africa pioneered civil forfeiture of property without prior conviction. The key difference between the forfeiture proceedings under Chapter 5 and those under Chapter 6 is that the provisions of the latter do not require criminal conviction or even prosecution of the person whose property is subject to forfeiture. Forfeiture is focused on the tainted property and is granted only in regard to the actual proceeds derived from unlawful activities or instrumentalities of the crime. It is imposed as a measure against the person’s property and is not a penalty imposed against the person. Its general aim is to strip the respondent of the property or assets derived from his or her wrongdoings. The statute stipulates that forfeiture can be ordered for offenses included in schedule 1 of POCA.69

Non-conviction based asset forfeiture under Chapter 6 consists of two phases: (1) preservation phase, whereby a court grants an order to preserve the property; and (2) forfeiture phase, whereby the court grants a final order, forfeiting the property to the state.

The prosecutor may apply ex parte to a High Court for a preservation order, which prohibits any person from dealing in any manner with the concerned property. If there are reasonable grounds to believe that the property is either an instrumentality of an offense referred to in Schedule 1of POCA, or represents the proceeds of unlawful activities, the court will grant such an order. There are no statutory requirements for the prosecutors to show to the court that an application for a forfeiture order will be made. Based on

68NDPP v. Kyriakou – “ … court held that NDPP does not have to prove as a fact that confiscation will be made, discretion of the court should be sparingly exercised and only in the clearest of cases where the consideration in favor substantially outweigh the considerations against…..” NDPP v. Rautenbach – “…court needs to only ask whether there is evidence that might reasonably support a conviction and a consequent confiscation order and whether that evidence may be reasonably believed….” 69Offenses under Schedule 1 of POCA include: murder, rape, kidnapping, public violence, arson, offenses dealing with gambling, offenses related to the Corruption Act, extortion, etc For a full list of Schedule 1 offenses, please see Prevention of Organized Crime Act (POCA) of 1998 at: https://www.fic.gov.za/DownloadContent/LEGISLATION/ACTS/02.POCA.pdf


Findings 39

section 38 (1), the prosecutor is authorized to apply ex parte for a preservation order without notifying interested parties; this section was challenged in the court on the basis that it infringes on the right of access to the court. The Constitutional Court upheld the constitutionality of section 38, holding that the principle of audi alteram partem was not excluded, meaning that in considering applications for preservation orders, the court still can apply the principle related to the provisions orders and return days provided for in Chapter 5 (Criminal Forfeiture). In reality, the AFU is tasked to conduct assessments based on the facts of the case and to determine whether or not a notice will be served.

Although the prosecutor is allowed to make an application for forfeiture ex parte, section 39 requires that after the preservation order is issued, notifications must be sent by the prosecutor to all persons with an interest in the property and that the notification be published in the Gazette. The prosecutor also is required to give notice of a forfeiture application to all persons who made an appearance with the intention to oppose after receiving notice of the preservation order. Persons making an entrance shall submit an affidavit containing the identity of the person, nature and extent of his or her interest, and the basis for defense based on which the forfeiture order is opposed (section 39(5)). Interested parties opposing forfeiture orders usually do so at the forfeiture stage of the proceedings, either in the forum of an appeal or an application for a variation of rescission. The preservation order will be in effect for 90 days, when it will expire, unless an application for forfeiture was made, an unsatisfied forfeiture order is pending, or the order is rescinded before the expiration of the period. Further, if it is considered necessary to preserve the property from being disposed of or transferred, the court will authorize its seizure. In such instances, provisions have been made to allow for appointment of a curator bonis, similar to the criminal forfeiture proceedings.

When a preservation order has been issued against a property, the court can make provisions for reasonable living expenses and/or legal expenses, if it is satisfied that those expenses could not be covered from other properties that are not subject to the preservation order, and if the defendant has disclosed under oath all of his or her assets and liabilities.

The public prosecutor can apply to a High Court for an order to forfeit property to the state, giving a 14-day notice to every person who entered an appearance. The statute also allows for late entry of appearance if the person was not aware of the existence of the forfeiture order, but before the judgment is given. For the court to grant a forfeiture order it must be satisfied on a balance of probabilities that the property is either an instrumentality of a Schedule 1 offense or is the proceeds of unlawful activities. Both statutory requirements have been a subject of consideration by the courts. Regarding the definition of the proceeds of unlawful activities,70 the SCA held that the definition is wide and should be narrowed and focus its analysis on the “connection” between the proceeds and unlawful activities, holding that “some sort of consequential relation should be required between the proceeds and unlawful activities.”71 It was held that the definition of proceeds does not refer to offenses, but to the “proceeds of unlawful activities,” which means that it includes “conduct which constitutes a crime or which contravenes any law.”72 The meaning of “instrumentality of an offense” has been even more intensely deliberated, holding that the definition contained in POCA73 is too wide. In Cook, SCA expressed its concerns that if the definition is interpreted literally it could lead to arbitrary deprivation of property and breach of the protections guaranteed by the Constitution (section 25). Further, the court concluded that a narrow interpretation of the definition of instrumentality was required, that the property must play a reasonable role in the commission of the

70 The proceeds of unlawful activities are defined to include “any property or part thereof or any service, advantage, benefit or reward which was derived, received or retained, directly or indirectly, in the Republic or elsewhere, at any time before or after the commencement of this Act, in connection with or as a result of any unlawful activity carried on by any person, and includes any property representing property so derived’. 71NDPP v. Rautenhach 2005 (4) SA (603) SCA 72NDPP v. Mohunram 73 “An instrumentality of an offense means any property which is concerned in the commission or suspected commission of an offense at any time before or after the commencement of this Act, whether committed within the Republic or elsewhere.” See POCA 1(1)


Findings 40

offense; that is, it should in a substantial sense facilitate the offense.74 The court held that this can be established based on the way the property has been organized, arranged, constructed, or furnished to enable or facilitate the commission of the crime. The court, in Cook, also held than an incidental relationship between the property and the offense is not sufficient to establish that the property is an instrumentality of the crime; however, the more incidents that can be established, the easier it is to draw a connection.

After the court has established, on balance of probability, that a property is an instrumentality of an offense, it will issue a forfeiture order. The validity of the order will not be affected either by the absence of a person with an interest in the property or by the outcome of the criminal proceeding. The prosecutor is required to notify a person with interest in the property that there are reasonable grounds to believe that the property is an instrumentality of an offense. If the court finds that the interest of third parties was acquired legally, or if the person has not known or suspected that the property is the proceeds of unlawful activity, it may exclude his or her interest from forfeiture. In such a case, the person bears the burden of proof to present evidence that he or she did not know that the property is an instrumentality of the crime or the proceeds of unlawful activity.

Courts were concerned that if forfeiture were ordered every time a property was found to be an instrumentality of a crime that it could lead to arbitrary deprivation of property. Thus, it determined that an inquiry be conducted into proportionality analysis before forfeiture of any property is ordered. The court looked at a number of factors, including: whether or not the property is integral to the commission of the offense, whether or not forfeiture would prevent further commission of the offense and the social consequences of the offense, whether or not the innocent owner defense would be available to the owner, the nature and use of the property, and the effect on the respondent of the forfeiture.75 After this inquiry, the court further narrowed and defined cases in which forfeiture of concerned property will be granted, evaluating the impact of forfeiture on the persons affected by the decision, and evaluating thoroughly the importance the property had for the commission of the crime. It seems that the court narrowed the implementation of forfeiture only in cases when the property was essential to the commission of the offense, and also granted and expanded the rights of innocent owners. Finally, in Mohunram, the court held that the NDPP has the onus to establish the proportionality of forfeiture sought, not the respondent.

The statute provides further protections for rights of any person affected by the forfeiture order. Section 54 allows a person with an interest in forfeited property, to apply for an excluding order 45 days after the forfeiture order was issued. The application should be accompanied with an affidavit containing relevant information on the title of property, acquisition time and circumstances and the relief sought. The applicant is also allowed to present further facts, evidence and witnesses on his or her behalf. Witnesses and other evidence can be also presented by the prosecutor. And lastly, provisions on appeal enable any person to challenge the forfeiture order at a higher court.

PoCA and South African case law

As stated earlier, although none of the POCA provisions were declared unconstitutional, substantive case law was developed since its implementation. Many aspects of the statute were challenged and the South African courts have, until now, upheld it. Thus, it is surprising to note that although Chapter 5 holds a number of statutory presumptions, which are considered by the court as prima facie evidence in determining the lawfulness of property, or shifting the burden of proof onto the defendant, these have not been challenged by the respondents. Most of the cases related to non-conviction forfeiture appear to be in the area of defining the meaning of the “instrumentalities of an offense” and establishing the connection

74 Raylene Keightley “Asset forfeiture in South Africa under the Prevention of Organized Crime Act 121 of 1998”, Civil Forfeiture of Criminal Property, Simon N.M. Young 75Prophet v. NDPP 2006 (2) SACR 525 (CC)


Findings 41

between the offense and the instrumentality of the property as well as proportionality analyses, as noted above.

An important case in civil asset forfeiture is NDPP v. Mohamed No and Others,76 where the Constitutional Court held that Chapter 6 provides for forfeiture in circumstances where it is established, on a balance of probabilities, that property has been used to commit an offense, or constitutes the proceeds of unlawful activities, even where no criminal proceedings in respect of the relevant crimes have been instituted. The court ascertains that forfeiture orders are not dependent on the institution or on successful conclusion of a criminal prosecution. The objective of civil forfeiture is to strip profits from those who have acquired them through unlawful activities. However, it is considered that Chapter 6 may lead to arbitrary deprivation or unjustifiable violation of the rights protected by the Constitution, precisely because it does not require the establishment beyond a reasonable doubt that an offense was committed. Forfeiture is focused on the “guilt’ of the property rather than on the wrongdoing of the owner.

Further the courts dealt with the definition of the scope of POCA, deliberating on whether POCA was limited to organized crime offenses, such as racketeering, money laundering, or criminal gang activities. The court held that while the ambit of asset forfeiture provisions of POCA 1998 extend beyond organized crime, it held that use of asset forfeiture outside of the ambit of organized crime would not always be appropriate and justified. This issue also was debated by the Constitutional Court in Mohunram v. NDPP,77 where the court held that it was unconvinced by the contention that Chapter 6 of POCA can reasonably be interpreted so as to apply only to so-called “organized crime” offenses. Judgments in Mohunram agree that fighting organized crime is a relevant factor in proportionality analysis, but that it is not necessarily a decisive factor. The court expressed concerns about disproportionate application of forfeiture, but was reluctant to interpret the purpose of POCA to target only property used as an instrumentality for commission of “organized crime” offenses.

Forfeited money is paid into the Criminal Assets Recovery Account (CARA), which is part of the National Revenue Fund. The CARA is administered by the Criminal Asset Recovery Committee, consisting of the Minister of Safety and Security, Minister of Finance, the National Director, and two other members. Its role is to make recommendations regarding allocation of moneys to institutions, organizations, or law enforcement agencies. Powers to institute an investigation to determine unlawful origin of property are vested in the Director of Public Prosecutions.

United Kingdom

The confiscation regime in the United Kingdom (U.K.) before consolidation by the Proceeds of Crime Act of 2002 was governed by various laws such as the Drug Trafficking Act of (1986), which provided for mandatory confiscation of the proceeds from drug-trafficking offenses, which was amended and consolidated in 1994. Further, part VI of the Criminal Justice Act (1988), amended by the Criminal Justice Act (1993) and further developed by the Proceeds of Crime Act (1995), governed confiscation of the proceeds from indictable and other summary offenses. By 1999, it was noticeable that the confiscation track record in the U.K. was poor, despite these confiscation powers. Few confiscation orders were issued and even fewer of what was ordered was being collected. As a result, the government ordered a study to evaluate the confiscation system in the U.K. The Performance and Innovative Unit (PIU) of the U.K. Cabinet Office conducted the evaluation and published a report in 2000 identifying key weaknesses in the national confiscation regime and making a number of recommendations to enhance it, including enactment of cohesive and comprehensive legislation. Responding to the recommendations, the U.K. legislators enacted the Proceeds of Crime Act in 2002, creating a comprehensive confiscation and asset recovery system, establishing the Asset Recovery Agency (ARA), consolidating criminal law with regard to money laundering and confiscation, introducing non conviction–based civil recovery and the use of revenue powers in relation to criminal gains, and developing ways to exchange information between the 76 2002 SA 843 (CC0 (12 June 2002) 77 2007 (2) SACR 145 (CC) (26 March 2007)


Findings 42

new agency and other authorities. The new legislation was described as representing “the new era focused on depriving the organized criminals of their illicit gains, and disrupting funding for future activities, thus showing crime will not pay.”78

The Proceeds of Crime Act of 2002 provides four procedures or regimes for seizure, forfeiture, and confiscation of the proceeds of crime: (1) in criminal proceedings following conviction of the defendant; (2) in civil proceedings in front of the High Court, also known as civil asset recovery; (3) taxation of incomes or gains suspected of being derived from crime; and (4) confiscation by police or customs and excise of cash suspected of being the proceeds of crime.

Conviction based confiscation

The aim of the conviction based confiscation proceedings is to recover profits and financial benefits derived from defenders’ criminal conduct. Chapter 2 of POCA provides for confiscation of the proceeds of crime following the conviction. Confiscation procedure can be initiated by the public prosecutor or ex officio by the court, after the defendant has been convicted of a crime. Before initiating the confiscation procedure, the court must determine if the defendant has benefited from its criminal activity. After establishing the benefit, the court must determine if the defendant has a criminal lifestyle. For “criminal lifestyle” to stand, the following conditions must be satisfied: (i) the offense must have been committed over a period of at least 6months and the benefit derived from the offense exceeds £5,000; (ii) if the defendant’s conduct forms part of a course of criminal activity and if he or she has benefited from that conduct (in the proceeding in which the defendant was convicted, he or she was convicted for three or more offenses); and (iii) if the defendant is convicted for offenses unlikely to be committed once (e.g., human trafficking, money laundering, drug and arms trafficking). To ascertain the financial benefits of the defendant, the court relies on the following assumptions: that any property transferred to the defendant over the past 6 years, from the day the proceedings against the defendant were initiated, is assumed to derive from crime, that all expenses incurred during the past six years are assumed to be covered by the profit derived from crime; and that any property transferred to or obtained by the defendant is considered to be free of any interest. The statutory assumptions aid in determining the defendant’s benefit from the crime, unless the court considers this will give rise to a serious injustice, or unless the defendant can prove that the assumptions are incorrect.

If the court decides that the criminal lifestyle standard is not met, then it will continue to determine whether or not the defendant has gained any financial or other benefit from the criminal conduct. If the court affirms that the defendant has profited from his or her conduct, it must calculate the profit gained from the particular offense. In this case, the prosecutor must prove beyond reasonable doubt the causal link between the particular offense and the derived benefit.

After determination of the amount from which the defendant benefited, the court determines the recoverable amount, which can be paid to the state; however, the court also must assume when calculating benefit that the victims of the conduct have or will start a proceeding to recover the loss, injuries, or damages caused to them as a result of the conduct. In determining the final amount, the court applies the general rule that the final recoverable amount should equal the profit made from the conduct. However, if that amount is no longer available, the court will decide its reduction accordingly. In addition, to prevent dissipation or transfer of assets, the court can issue a restraining or freezing order, ordering the defendant not to deal with the assets.

The law provides that a confiscation hearing can be held before the defendant is sentenced for the offense and for a maximum of two years after the date he or she was convicted. The payment order should be enforced within a specified period of time, as ordered by the court. If the defendant fails to make the payment, the court can order imprisonment, which is ordered in addition to the primary sentence. Both the prosecutor and the defendant can apply for a variation or discharge of the confiscation order. 78 Asset recovery under the Proceeds of Crime Act 2002: the UK experience, Angela V.M. Leong


Findings 43

The standard of proof applied throughout the proceedings is the civil standard, balance of probabilities. Contrary to this conclusion held by the representatives of the Judicial Cooperation Unit of the Home Office and the Head of Asset Forfeiture,79 GRECO80 evaluators in the Annual Report concluded that in cases when the court establishes that the defendant has a criminal lifestyle, the burden of proof shifts onto the defendant to prove the legitimate source of his or her assets. Provision 17 of the POCA 2002 empowers the court, on receipt of the statement from the prosecutor, and the director to share the statement with the defendant, and authorizes the court to request that the defendant submit a statement accepting the allegation or offer other information on matters he or she proposes the court to consider. This does represent a reversal of burden of proof during the proceedings after the prosecution has shown that the defendant has a criminal lifestyle, whereby the defendant is offered an opportunity before the court to prove legitimacy of the concerned property.

Non-conviction based forfeiture - Civil recovery

Non-conviction based forfeiture or in English legislation knows as civil recovery proceedings were introduced in the Proceeds of Crime Act 2002, with recommendations from the Home Office Working Group on Confiscation and the PIU report in 2000 permitting forfeiture of assets derived from unlawful conduct, without prior conviction. This regime is considered more intrusive and better suited to counter increasingly well organized and sophisticated criminal activity.

Part V of POCA 200281 authorizes the Serious Organized Crime Agency (SOCA, of which ARA is now a part)82 to apply for the recovery of the property obtained through unlawful conduct, before the High Court for offenses committed in the U.K., Ireland, Wales, and Scotland. Cases are referred to ARA from the law enforcement agencies when: (a) there is no sufficient evidence to pursue criminal charges; (b) no criminal charges are made due to public interest; (c) confiscation proceedings have failed; and (d) the defendant is beyond reach because that person is dead or abroad and there is no reasonable prospect of securing his or her extradition. Before an investigation is initiated by the ARA, certain criteria must be met: (1) the case must normally be referred by a law enforcement agency or prosecution authority; (2) recoverable property must be identified and have an estimated value of at least £10,000; (3) recoverable property must be obtained within last 12 years; (4) there must be significant local impact on communities; and (5) there must be evidence of the criminal conduct supported on the civil standard balance of probabilities. A significant limitation on the investigative powers is the restriction of the ARA to investigate only the cases referred from law enforcement agencies, thus restricting ARA’s power to initiate investigations independently. Significant investigative powers were granted to ARA under Part 8 of POCA, such as production orders, search and seizure warrants, disclosure orders, customer information orders, and account monitoring orders. The disclosure order is one of the most important orders because it enables SOCA staff or the Director to ask any person to produce documents, provide information, or answer questions related to an investigation.

The court may order the applicant to notify the respondent and any third party with interest in the property that is subject to the recovery order. The court will grant an interim order if it is satisfied that there is a good arguable cause, that the property is recoverable property, and that any of the recoverable property is associated property.83 The burden of proof is on the ARA to prove on the balance of probabilities that the

79 Tough on Criminal Wealth; Exploring the Practice of Proceeds from Crime Confiscation in the EU, Barbara Vettori 80 GRECO Second Evaluation Round–Evaluation Report on the United Kingdom, 2004 81 Civil recovery regime influenced by the RICO experience in the U.S., Criminal Asset Recovery in New South Wales, and the Proceeds of Crime Act 1996 of Ireland 82 Asset Recovery Agency incorporated in the Serious Crime Agency 83 Associated property is defined by Section 245 of POCA 2002 to be “any property held by the respondent which is not in itself the recoverable property but: (a) any interest in the recoverable property; (b) any other interest in the property in which the recoverable property subsists; (c) if the recoverable property is a tenancy in common, the tenancy of the other tenant; (e) if (in Scotland) the recoverable property is owned in common, the interest of the other owner; and (e) if the recoverable property is part of a larger property, but not a separate part, the remained of that property.”


Findings 44

property is recoverable and was obtained through unlawful conduct. It is sufficient to prove that the property was obtained from unlawful conduct, whether or not the person received, money, goods, or services for commission of the conduct; the ARA does not have to prove that the conduct was of a particular type. Therefore, the property may be recoverable even if it is not possible to prove that the particular property derived from a particular type of crime. The respondent has the burden to prove the lawful source and to produce evidence that rebut the allegation that his or her property is recoverable.

The ARA may apply to the High Court ex parte to issue an interim receiving order. An interim receiving order can be an order for: (i) detention, custody, or preservation of property, and/or (ii) appointment of an interim receiver. The ARA may, per Civil Procedure Rules, apply for freezing injunctions to preserve assets for the purpose of meeting a recovery order when there is an imminent risk of dissipation of assets.

The court will grant an interim receiving order if it meets the following two standards: (1) if there is an arguable cause that the property is recoverable, and that if part of the property, which is not recoverable, is associated property, and (2) the identity of the person who holds the associated property could not be established.84 The court appoints a receiver to manage the property with wide powers and responsibilities, including establishing the owner of the property, location and the extent of property, management of the property, including sale of perishable goods, carrying on the business or trade, as well as undertaking any other steps the court deems appropriate. The unique role of the receiver in U.K. legislation is that in addition to the roles outlined above the receiver is also responsible for taking and continuing the investigation from the ARA.

If the court decides that the property is recoverable, it must issue a recovery order vesting property in the trustee to undertake civil recovery. The trustee is appointed by the court and acts under the direction of the ARA director. The trustee is responsible for (i) securing the detention, custody, or preservation of the property vested on him, (ii) realizing the value of the property for the benefit of the ARA, and (iii) assuming any other function delegated to him.

In 2002 the decision was made to abolish the ARA and redistribute its functions to SOCA (under the Serous Crime Act 2007). The amendments of 2005 empower SOCA to sue anyone in the High Court if it suspects the person has gained or benefited in any way from unlawful conduct.

Cash forfeiture

The third regime provided for by POCA 2002 extended the scope from what was originally provided under the Drug Trafficking Act of 1994. It extends cash forfeiture to cover the proceeds from all offenses, allows for search, seizure, and forfeiture of cash intercepted anywhere in the country suspected of being the proceeds of crime or intended to be used for commission of a crime, and the amount to be forfeited is not less than £5,000, recently reduced to £1,000.85 Cash forfeiture86 originally was applied only to the cash intercepted at the border crossings for the proceeds suspected to derive from or intended for commission of drug-trafficking offenses.

Cash forfeiture is a civil procedure and the civil standard of proof applies; thus, conviction is not required as a prerequisite to apply for forfeiture or enforce a forfeiture order. POCA authorizes police, customs, and excise officers to search, seize, and apply for forfeiture of cash if the following conditions are met: (1) there is a reasonable ground to believe that the person is carrying, transporting, or owning cash that is suspected to be the proceeds of crime, or intended for commission of a crime; (2) the cash is a recoverable property; and (3) the amount is no less then £1,000. If these conditions are met, the police and customs officers can detain the person if necessary to carry out search and seizure; however, although the law

84 POCA 2002, section 246 (5) (a) (b) 85 Ceiling for cash forfeiture initially set not to exceed £10,000; this amount later reduced to £5,000, while recently, in 2006, it was decided to reduce the ceiling to £1,000 86 Cash is broadly defined as including notes or coins in any currency, postal orders, and checks of any kind including traveler’s checks, banker’s drafts, bearer bonds and bearer shares. Proceeds of Crime Act, s289 (6) U.K.


Findings 45

permits the search of premises, it does not allow intimate or strip search of the suspect. In most circumstances, for police or customs officers to carry out searches, approval from the Justice of Peace (in England, Wales, and Northern Ireland) and the sheriff (Scotland) is required. If it is not practicable to obtain an approval, the law provides for a senior officer, a police inspector, or equivalent to approve search and seizure87; in such circumstances, the officers conducting the search are required to submit a written report justifying their actions and justifying the necessity of immediate action. Cash seized during the search can be retained for no more than 48 hours; this time can be extended only with the decision of the Magistrate Court or Justice of Peace. While the cash is seized, the Commissioner of Customs can submit an application to the Magistrate Court for forfeiture of the seized cash in whole or in part.

Cash forfeiture is considered to be a successful tool in depriving criminals of the proceeds of crime, although success rates vary among different police services depending on the level of training received on the application of the cash forfeiture law. The number of seizures and forfeitures reported by the ARA indicate that expansion of the use of the cash forfeiture regime led to a peak in 2003, when there were 422 cash seizure totaling £16.7 million. In the years between 2006 and 2009, there has been a progressive increase in the amounts recovered in cash forfeitures, as seen in the table below.

Table 1: 2008/09 Proceeds of Crime Compared with Earlier Years88

2006–2007 2007–2008 2008–2009 % increase from 2006 to 2009

Cash seizure £3.3M £8M £9.2M 178%

Cash forfeiture £2.3M £2.9M £4.5M 95%

Taxation powers under PoCA

The fourth power provided by POCA is taxation of the proceeds of crime. This measure is introduced as an alternative to civil recovery, granting revenue functions to the Director of the ARA to assess a suspect’s income and taxes. The qualifying condition enabling the Director of the ARA to assess a suspect’s income is that he or she should have reasonable grounds to believe that the income gained is a chargeable income or that the accrued profits are a result of a person’s criminal conduct. Further, POCA authorized the director to assess a company’s chargeable profits resulting from the company’s or another person’s criminal conduct (POCA 317). To enforce taxation there is no need for the ARA to provide evidence that the profit was derived from a specific crime and it is immaterial if the source of an income cannot be identified (POCA 319). Inland Revenue has the power to assess a person’s income tax; however, it cannot act in cases when the source of income cannot be identified. Similar provisions are provided for inheritance tax, authorizing the director to assess the inheritance if there are reasonable grounds to suspect that the transfer made is attributable to criminal property. In applying internal revenue provisions the director must apply interpretations published by the Board of Inland Revenue.

The power to tax the proceeds of crime was introduced in the U.K. because it was estimated that criminal organizations have generated somewhere between £.6.5M and £11B in 199689 alone, and some of these revenues were untaxed and thus considered to destabilize the U.K. financial system. Inland Revenue has leant staff to SOCA to enhance the sharing of information and experience.

Effectiveness The civil recovery procedure has yielded fewer results than expected. The procedures are lengthy and encounter many legal challenges, and only a small percentage of seized assets are actually recovered and collected by the agency. For example, for years 2004–2005, out of £15 million seized, only

87 The rules defining this authority are provided for in the Code of Practice issued by the Secretary of State (292 POCA 2002) 88 Serous Organized Crime Agency (SOCA) Annual Report 2008/09, p.32 89 “Asset Recovery Under the Proceeds of Crime Act 2002; the UK experience,” Angela V.M. Leong


Findings 46

£5.6 million was recovered. Similarly, in 2005–2006, out of £85.7 million seized, only a small portion of the total £4.6 million was recovered.90

The decision to establish the ARA was made based on the experience of other agencies dealing with criminal confiscation; therefore, setting too high an expectation and targets. Operational and financial costs also were estimated based on the experience of other agencies, without taking into consideration the complexity of the cases with which the ARA would be dealing, the legal challenges it would face, and the length of the civil proceedings. Another criticism was ARA’s failure to cover its costs; it used £60M to cover operational costs over the three years of its existence, but it recovered only £8M. Thus, targets set for the ARA were often too high and difficult to achieve. It was noted that at the best case, between 2003 when the ARA was established and 2009 (last report) the ARA was able to achieve only three of its five targets.91

In addition, legal challenges caused significant delays in the civil recovery proceedings. Fundamental concerns regarding civil proceedings were raised, such as concerns related to lack of proportionality, lack of presumption of innocence, and the double jeopardy rule. Some respondents argued that the civil recovery procedure should be criminal and not civil, which would trigger the safeguards guaranteed by Articles 6 and8 of the European Convention on Human Rights (ECHR). However, the High Court dismissed these concerns, holding in Walsh v. The Director of the ARA; R (the Director of the ARA) v. He & Cheng, and R v. Belton (N. Ireland), that civil recovery is not a criminal but a civil proceeding in nature, and is intended to recover property obtained through unlawful conduct and not to penalize any person and as such it does not trigger protections built into the criminal proceedings such as presumption of innocence or the double jeopardy rule.

Further, it was noted that when considering POCA 2002, the Home Office was careful to consider and incorporate human rights safeguards in the legislation, ensuring that provisions in POCA are in agreement with the standards of the ECHR, striking the right balance between the rights of the individual to enjoy property and the right of society to reclaim illegally gained assets. Some of the safeguards incorporated are: setting the minimum threshold of £10,000, ensuring that the burden of proof remains with the state, and ensuring that all respondents have legal representation during the proceedings and, therefore, providing legal aid and incorporating provisions that provide for compensation in cases of wrongful judgments. The intention of the legislature was to make confiscation the primary tool to deprive criminals of their profits, with the civil recovery remaining an alternative, and the taxation regime to be used as a last resort. However, this was later modified with the Revised Guidance issued by the Secretary of State to the Director of ARA in February 2005, indicating that criminal investigations, civil recovery, and taxation investigations and proceedings can be instituted at the same time, thereby modifying the alternative role of the civil recovery and taxation regime, and placing them at the forefront of the forfeiture regimes.

3.1.3 Countries that have some form of unexplained wealth provisions that apply to all offenses, providing for reversal of the burden of proof in a criminal proceeding

Austria

Austrian legislation has recognized forfeiture and confiscation as additional penalties for committed crimes since 1987. However, these provisions were not applicable in many cases when attempting to confiscate gains derived from serious crimes. To remedy this situation and enhance confiscation of criminal proceeds, the legislature revised and re-enacted the provisions on conviction based confiscation in 1996. The amended Austrian Criminal Code provides for confiscation in both civil and criminal proceedings.

90 Evaluation of the Civil Recovery Regime, Angela V.M. Leong 91 See ARA and SOCA Annual Reports


Findings 47

Conviction based confiscation in criminal proceeding. The rationale for introducing the new confiscation rules is that “crime must not pay” and the profit should be taken away from the offender, with the aim of deterring them from doing wrong again. These rules are applicable to all punishable offenses for which the offender has gained or received any kind of financial benefit.

These provisions are widely known as skimming-off profit rules, which is different from previous legislation where they do not provide an additional penalty but are a standalone sanction. They are non-conviction based, whereby the prosecution does not need to establish a linkage between the proceeds to be confiscated and a commission of a specific crime or offense. The procedure can be initiated in parallel with the judgment of conviction, independently, or even without instigating a conviction procedure at all.

Section 20 of the Penal Code provides for a reversal of the burden of certification of origin, avoiding full reversal of the burden of proof, and focusing on the burden of the defender to present the facts. It is sufficient for the prosecution to prove that the defendant has continuously and repeatedly committed criminal offenses and that he has obtained economic benefit from it, or has received economic benefit from committing an offense, and he will be condemned to pay an amount of money equivalent to the gained illegal profits. Similarly, members of criminal organizations who have gained pecuniary benefits during the time they were members can be stripped of their assets. The court has only to establish that the perpetrator was a member of criminal organizations during a period of time and the burden of proof shifts onto the offender. However, the implementation of the reversed burden of proof provided by section 20, paragraph 2, can be solely used in specific and restricted circumstances and, second, at least in certain cases, the provisions relative to such reversal are substantially purposeless because they are not understood and interpreted by judges.92

Confiscation rules in Austria are subject to limitations; for example, if gained profit is less than €21,802, the confiscation procedure will be renounced; however, the law allows the court to add up profits gained from several offenses. Similarly, it is left to judges not to apply confiscation measures in cases where the costs of the proceedings would be disproportionately higher than the amount of money to be confiscated or if confiscation would cause an undue hardship for the person. However, an interesting feature of the confiscation procedure in Austria is the application of the net principle, which targets only the net profits of the offender, excluding expenses incurred when committing the crime. However, payments made to accomplices are not taken into account.

The Council of Europe Group of States Against Corruption (GRECO) criticized the Austrian confiscation rules in its 2008 Annual Report,93 ascertaining that payment of an equivalent sum of money does not target the actual proceeds derived from offenses, but rather imposes a financial measure that would amount to illegal benefit, and this system would face difficulties when attempting to apply it to certain types of gains (e.g., immaterial advantages such as honorary distinction, assets that have a particular value of the offender notwithstanding their real market value). Furthermore, the report found that the provisions are silent as to the kinds of assets to which they can be applied (e.g., movable, immovable property, initial or converted proceeds, assets convoluted with legal income, transferred to third persons or relatives). The Austrian authorities hold that this value confiscation system is ultimately equivalent to a system of direct confiscation.

In addition, if the assets derived from criminal activity were not seized and are not available for confiscation, an equivalent sum of money can be paid to the state by the offender to fulfill the imposed sanction. However, different from other countries, the imposition of imprisonment in case of default of payment is not allowed.

92Tough on Criminal Wealth: Exploring the Confiscation of Proceeds of Crime, Barbara Vettori, p. 43 93 GRECO; Joint First and Second Evaluation Round; Evaluation Report on Austria available at: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoEval1-2(2007)2_Austria_EN.pdf


Findings 48

Non-conviction based asset forfeiture. Contrary to skimming off assets, forfeiture is stipulated as in rem and applies the gross principle, disregarding the expenses incurred while committing the offense, and allowing forfeiture of the total value considered to be derived from the offense. Forfeiture is applied to—

Assets at the disposal of the criminal organizations Assets secured in Austria for offenses committed abroad, for offenses not under Austrian

jurisdiction but being punishable under the law of the scene of the crime.

To impose the forfeiture of assets belonging to criminal organizations, two facts must be established: (i) evidence of the existence of a criminal organization; and (ii) economic power of disposal, the latter being the most important.

According to the forfeiture rules, the forfeiture is not allowed if there are legitimate third-party claims by persons who have not participated in the offense or who are not members of the criminal organization. In such instances the court will not proceed with the forfeiture. Forfeiture is ordered simultaneously with the judgment of conviction, but it also can be initiated independently of the conviction proceeding.

Investigations are carried out by the Financial Investigation Unit, which was created as part of the Ministry of Interior and has and uses common investigation techniques. Sometimes investigations are carried out during the trial phase. The prosecution, through the investigative judge, issues a provisionary injunction. As pointed out earlier, the prosecution needs only to establish sufficient facts that the person is or was a member of a criminal or terrorist organization and the burden to present facts shifts to the offender to prove the origin of the property.

Effectiveness Austria has no reliable data on confiscation. Since the reform of the national confiscation system in 1996, public prosecutors are required to complete a form on collected data on the quantity of the seized and confiscated assets. This data collection system does not work because the information provided to the Ministry of Justice is incomplete.94

France

France is a country with a civil legal tradition, and has recognized confiscation as an instrument to combat serious crime since 1810. The old French law had at its disposal two models of confiscation: General Confiscation, whereby all of the offender’s property and assets could be forfeited to the government, and Special Confiscation, forfeiting only parts of the offender’s assets. General forfeiture was applied only in rare occasions for specific crimes during World War II, such as treason, espionage, and the like. The new Criminal Code of 1994 does not differentiate between general and special confiscation, but distinguishes between obligatory (mandatory) and discretionary (optional) confiscation. Mandatory confiscation is ordered as a preventive measure for instrumentalities, hazardous or dangerous materials used or intended for use or derived from criminal offenses. Discretionary confiscation may be ordered for all serious and misdemeanor offenses punishable by imprisonment.

The Criminal Code and the national confiscation systems were subject to amendments in 199695, 1999, 2000, and 2005; the most recent amendments were approved in July 2010,96 are yet to be implemented.

94 Tough on criminal wealth: Exploring the practice of proceeds from crime, Barbara Vettori 95(Act no. 1998-468 of 17 June 1998 Article 5 Official Journal of 18 June 1998) Where the law so provides, a felony or a misdemeanor may be punished by one or more additional penalties sanctioning natural persons which entail prohibition, forfeiture, incapacity or withdrawal of a right, an obligation to seek treatment or a duty to act, the impounding or confiscation of a thing, the compulsory closure of an establishment, the posting a public notice of the decision or the dissemination the decision in the press, or its communication to the public by any means of electronic communication. ARTICLE 131-11 Where a misdemeanor is punishable by one or more of the additional penalties enumerated under article 131-10, the court may decide to impose as a main sentence one or more of the additional penalties. The court may fix the maximum period of imprisonment or monetary penalty which the penalty enforcement judge may order to be wholly or completely enforced, under the conditions set out under article 712-6 of the Code of Criminal Procedure, if the convicted person fails to respect any


Findings 49

France recognizes only conviction-based confiscation, whereby confiscation of assets or property can be ordered only if the person is convicted for commission of an offense. Confiscation is characterized as an additional optional measure; that is, the judge has the option to impose confiscation as complementary or as a standalone sanction, and thus can even replace the primary issued prison sanction. Confiscation is mandatory for objects classified as dangerous or harmful, instrumentalities, and things used or intended for the commission of the offense or its proceeds, except for articles subject to restitution. The law also authorizes confiscation of equivalent value if the goods ordered for confiscation are no longer available.

For a number of offenses, including crimes against humanity, drug trafficking, money laundering, trafficking inhuman beings, prostitution, terrorism, begging, and criminal associations, the Criminal Code foresees general confiscation of part or all of the offender’s property, whether private individual or legal person, whatever its nature, movable or immovable, and whether it is jointly or separately owned. In addition, Article 433-22 allows for the confiscation of unlawfully received gifts, which is related to corruption of public officials. The provision of this article focuses on confiscation of the proceeds of corruption attained by civil servants, publicly exposed people, and members of the judiciary.

France not only has introduced complete reversal of the burden of proof onto the defendant, but also has made it the central element of the criminal offense. Until 1996, the prosecution had the burden of proof in the proceeding to establish that the proceeds were of illegal origin; only one exception was permitted, under Article 222-39-2, for those convicted of carrying on a habitual relationship with a drug trafficker or user. The amendments of 2003 and 2004 of the French Criminal Code expanded the exception to cover all types of crimes, stipulating that all persons who are not able to account for the lawful origin of their income and who are associated, in close contact, or living with persons engaged in human trafficking, prostitution, begging, extortion, and persons committing misdemeanors or felonies against the properties of others, acts of terrorism, and all persons who participate in criminal associations,97 will be charged with criminal offenses. If convicted, they can be imprisoned and ordered to pay a significant fee. In addition, for certain criminal offenses, an additional penalty of confiscation of all or part of their assets can be imposed against the defendant. This represents a radical move in French criminal law because it not only reverses the full burden of proof onto the defendant but also makes it a central element of a crime. The charged crime in such cases is the inability of the person to justify the legal origin of his or her income. Contrary to the laws in Ireland and Australia, which imposes confiscation of assets, the French criminal justice system not only imposes confiscation and payment of a fee, which are financial measures, but also imposes imprisonment, thus targeting the personal freedom of the defendant. The law does not require the existence of a predicate offense to impose these measures. It is interesting to note that when interviewed,

obligations or prohibitions arising from the penalty or penalties imposed under the provisions of this article. The president of the court gives the convicted person notice of this after pronouncing his decision. The prison sentence or the fine which the court fixes may not exceed the penalties incurred for the misdemeanor for which the judgment has been pronounced, nor those provided for by article 434-41 of the present code. Where the provisions of the first paragraph are applied, the provisions of article 434-41 are thus not applicable. 96 Extension of the possibilities of searches to seize assets subject to confiscation under article 131-21 of the Criminal Code; Possibility of investigation for certain offenses to order security measures on assets (movable and immovable) as a guarantee for the payment of fines and the compensation of victims; Determination of rules applicable to seizures when these relate to all or part of the assets of a person, immovable assets, movable assets or non-physical rights on movable assets, or seizures which do not lead to dispossession. Creation of the Agence de gestionet de recouvrement des avoirssaisis et confisqués (Agency for the Management and Recovery of Seized and Confiscated Assets). It will manage all assets, regardless of their nature, which have been seized, confiscated or are subject to conservatory measures during a criminal procedure, as well as with transferring or destroying such assets. Authorizes the court to order the seizure of assets which it has confiscated and have not yet been subject to seizure. When confiscation is final the immediate sale of movables whose value may depreciate quickly may be ordered and finally the Criminal Procedure Code of provisions on international cooperation to execute decisions on confiscation. 97 Article 222-39-1, Article 225-6, Article 225-12-5, Article 321, Article 222-39-1 and Article 450-2-1 of the French Criminal Code. English translation of the French Criminal Code available at http://195.83.177.9/code/index.phtml?lang=uk


Findings 50

despite the radical character of these legal measures, French authorities stated that this option is used in judicial practice without causing any difficulties.98

French law also allows for confiscation pursuant to administrative procedures by the customs code, whereby customs officials are authorized to confiscate contraband materials, proceeds of crime, sums of money, and other items.

The law foresees seizure of all objects that could serve as evidence, instruments that have been used or intended for the commission of the offense, and objects that appear to be the proceeds. Seizure can be applied as early as during preliminary inquiries or judicial investigation with a warrant issued by the judge. Seized objects then are listed and placed under seal of proof of origin under court custody, except bank and post office accounts. The Financial Intelligence Unit TRACFIN also can block, for up to 12 hours, suspect bank transactions. The 12-hour time period can be extended only by the president of the Paris Regional Court. There is no department or body dedicated to managing seized assets; movable assets are stored in court registries, while immovable property is overseen by court-appointed receivers. When the subject of seizure is money or securities they are deposited in a bank account.

Financial investigation and confiscation of proceeds is undertaken by two different agencies operating under the auspices of two different ministries. TRACFIN99 operates under the Ministry of Finance, Economy and Industry, and OCRGDF100 under the Ministry of Interior. Although their areas of operation are similar and may even overlap, coordination between the two agencies is lacking because of a well-known rivalry between the police and the customs authorities. Financial investigations are carried out in almost all cases whereby the TRACFIN follows the trail of the money, tracking bank accounts through which funds were channeled and identifying holders and beneficiaries. Banking secrecy and confidentiality regulations do not represent grounds for opposing such judicial actions. To facilitate such investigations, France has established automated filing of all open bank accounts in France. Another route available to financial investigators is the use of the simplified tax procedure, which enables them to process national information on all individuals and legal persons under the jurisdiction of the tax directorate.

Because confiscation is conviction based it usually is ordered by the trial court and the prosecution does not need to submit a special application. All confiscated assets and materials become state property.

Effectiveness There are no statistical data on the seizure or confiscation of the instrumentalities and proceeds of corruption or equivalent assets to these proceeds, but bank accounts are seized in nearly all corruption cases.

Italy

Italy is one of the first countries in Europe, perhaps the world, to enforce UWO measures as a tool to attack the financial base of organized crime and go after the profit acquired from criminal enterprises. Italy adopted this approach in its attempt to fight mafia-organized groups in southern Italy originating in the late 1950s after the World War II. These measures were not officially known as UWOs, but they contain key elements constituting UWOs; for example, they shift the burden of proof to the property owner to justify the legitimacy of the property; they are non-conviction based; and all or part of the assets and/or property for which lawful origin cannot be justified can be seized and subsequently forfeited.

Confiscation and forfeiture, according to Italian legislation, can be imposed in two different procedures,101 the first being part of the patrimonial or preventive measures, also known as “extra judicial”, and is non-conviction based, and the second being the punitive or judicial measures, whereby

98 GRECO Annual Evaluation report on France, 2006, p. 4 99Traitement du renseignement et action contre les circuits financiers clandestins (TRACFIN) 100 Office Central pour la Repression de la Grande DelinquanceFinanciere (OCRGDF) 101Letizia Paoli, “Seizure and Confiscation Measures in Italy: An evaluation of their effectiveness and constitutionality, 1997, European Journal of Crime, Criminal Law and Criminal Justice


Findings 51

the confiscation order is issued in the course of criminal proceedings is conviction based (Article 240 of the Italian Penal Code).

Preventive (administrative) measures-non-conviction based

Although controversial and heavily criticized for violating personal rights, such measures have been upheld by the Constitutional Court and supported by the parliament and judicial authorities. They are constituted as preventive measures and are enforceable on five categories102 of subjects considered socially dangerous, regardless of the commission of the offense, to which five preventive measures can be applied. They are non-conviction based, administrative in nature and are enforced outside criminal proceedings by law enforcement authorities under judicial supervision and under looser rules of evidence.

These measures were introduced for the first time in 1956 as personal preventive measures or Misure di prevenzione personale, and were modified in 1965 (Law No. 575) and in 1982 (Law No. 646103) to reflect the evolution of crime. The 1965 amendment (Law No. 575) extended the law to apply to preventive measures, including special and personal supervision of those “suspected of belonging to Mafia organizations.” The 1982 amendment, known also as the Rodogne-La Torre Act,104 extended the scope to include “the suspects belonging to mafia type associations, or to the Camorra mafia type associations, known locally as pursuing goals or acting in ways that correspond to those of mafia type associations,” thus extending the application to other types of criminal behavior that use the methods and ways of mafia organizations, such as drug or human trafficking, prostitution, and so on. The most important innovation introduced by the 1982 amendment was the property or financial measure, which authorized seizure and confiscation of property and assets of the suspects belonging to mafia organizations. If a suspect was unable to justify the lawful origin of his or her assets or property, the court was authorized to order confiscation in whole or in part of his or her personal assets. The mere suspicion that a person is a member of a mafia-type organization was sufficient to impose preventive measures. According to Article 2-bis of the 1965 amendment, the source of income of those suspected of belonging to a mafia organization is assessed in terms of their lifestyles, financial means, property, and economic activities. However, with later development of the legislation, these requirements have been made more stringent and the evidentiary requirements to instigate the imposition of preventive measures must be beyond the stage of mere suspicion. However, the latter has been criticized by some legal scholars who believe that preventive measures were progressively taking on a more penal and judicial character.

Before enforcing preventive measures, police and the prosecution are required to investigate the suspect. Investigation is extended to cover his or her family members, including spouse, children if they have lived with the suspect over the past five years, and any other legal entity, company, syndicate, association, or organization in which he or she could have disposed of part or all of his or her assets. Seizure and confiscation are regulated by the 2-ter of the 1965 amendment (Law No. 575). The prosecutor must make an application for preventive measures and the court has the authority to order seizure or confiscation of assets. Two conditions are required for seizure: (i) assets must be directly or indirectly at the disposal of the suspect; and (ii) there must be a discrepancy between the suspect’s wealth and his or her income or there must be sufficient evidence that the assets are the proceeds of crime or the use thereof. Imposition of a confiscation order against the suspect is followed by the application of personal measures.

Although this is an extra judicial proceeding, there is a reversal of the burden of proof, which requires the suspect to present sufficient evidence and to justify that his or her assets are not the proceeds of crime. If the defendant cannot prove lawful origin of his or her assets, the court can issue a confiscation order

102 At the time of its entry into force, the law provided for five categories of criminal behavior: vagabonds, those involved in trafficking, prostitution, drug trafficking, illegal betting and gambling. 103 Preventive measures among others include, formal notice, return to their place of residence (repatriation) or prohibition of residence in one or more municipalities or provinces, withdrawal of licenses, concessions or applications of register, linked with the exercise of economic activities in which the person put under personal preventive measures takes part. 104


Findings 52

depriving the suspect of the proceeds. The prosecution does not need to prove commission of an offense or link assets or proceeds to a specific crime.


Confiscation of assets considered to be instruments of crime and proceeds of crime is conviction based, governed by Article 240 of the Criminal Code. The first paragraph of Article 240 stipulates that “in the case of conviction the judge may order forfeiture if the things that were used or were intended to accomplish the crime or of the things that were the product or the profit.” For confiscation to be ordered the first prerequisite is imposition of a conviction on the defendant for an offense. The standards of evidence are those of regular criminal proceedings “beyond reasonable doubt”; thus, the prosecutor is required to provide proof under the rigorous requirements of the rules of criminal proceedings that the defendant has committed an offense. Confiscation per Italian criminal law can be optional or mandatory. Optional confiscation is for all criminal offenses whereby the judge has the discretion to decide whether or not to impose confiscation. Mandatory confiscation, which represents a supplementary sanction, is for a number of criminal offenses enumerated under Article 416-bis, such as those associated with mafia-type extortion, kidnapping, loan sharking, and various types of money laundering as well as drug trafficking.

Per Article 321 of the Criminal Code, seizure of a part or all assets is allowed in all cases where there is a probable cause that there may be a future confiscation that may occur at the end of the trial. Further, the Article 12quinquies enacted in 1992 (Law No. 356) stipulates that those convicted of committing offenses associated with the mafia, including drug offenses, organized crime, and money laundering, are required to demonstrate the lawful source of their income and property. If they are unable to do so, they may be imprisoned for up to five years and forfeiture of part or all of their assets is compulsory. The second paragraph of this disposition provides for the reversal of the burden of proof, shifting the burden from the prosecutor to the defendant to justify the origin of his or her assets. This paragraph was declared unconstitutional in 1994 by the Constitutional Court, on the grounds that it was contrary to the principle of the presumption of innocence of the criminal proceeding and violated Article 27 of the Italian Constitution. To cover the legal vacuum created by the striking of the law, the government enacted 12sexies the same year. The new law retained the compulsory character of the confiscation for those convicted of crimes stipulated under 416-bis. The text makes forfeiture compulsory in the case of a conviction for crimes prescribed by Articles 416-bis (delinquent mafia-type association), 629 (extortion), 630 (kidnapping for ransom), 644, 644-bis (loan sharking), 648, 648-bis, 648-ter (various types of money laundering) of the Penal Code,105and foresees that if a person convicted of crimes associated with mafia cannot justify the origin of the assets and if these appear to be disproportionate to his or her income, as declared in the tax declaration. The new law carries more stringent conditions for its application: the first limit being to those convicted of mafia-type crimes; the second requiring that the property be disproportionate to the assets stated in the tax declaration and the income made from economic activities; and the third that there is no need to establish a causal link between the assets to be confiscated and a specific offense.106

There also are doubts about the constitutionality of the new law as well; however, the Constitutional Court has not yet challenged its application. Some legal scholars consider that this law is unconstitutional because it does not allow the judge to verify and establish whether or not the convicted person is associated with or is a member of a mafia-type organization.

Reversal of the burden of proof was introduced initially with the 12quinquies law in 1992 and amended with law 12sexies, which were introduced to overcome the limited impact of Article 240 of the Criminal Code, which was considered ineffective in fighting organized crime. These provisions allow for 105LetiziaPaoli;”Seizure and Confiscation Measures in Italy,” European Journal of Crime, Criminal law and Criminal Justice, vol.5/3, 256–272, 1997 106GuilianoTurone “Legal frameworks and investigative tools for combating organized transnational crime in the Italian experience.” GuilianoTurone is Judge of the Supreme Court of Italy, Rome.


Findings 53

compulsory confiscation of criminal assets derived from criminal activities that are well established and for which the prosecution does not have the possibility of collecting sufficient evidence under strict rules of criminal proceedings to prove their illegal origin. After the law 12quinquies was declared unconstitutional, the new law 12sexies retains the inversion of the burden of proof, but under a number of stringent conditions. Because the inversion of proof is limited to certain criminal offenses, some serious crimes that endanger society cannot be covered by this law.

Effectiveness In regard to the efficiency of the application of rules ordering confiscation of illegal proceeds, there is a general consensus among scholars and practitioners that the effect is meager. According to available statistical data, which are not abundant, lack accuracy, and are duplicative, only a small number of seized assets is actually confiscated. For example, the data that exists for the years 1982–1995 show that out of 19,125 seized assets, only 5,333 were subject to confiscation orders, which is only 30% of the total seized assets. Moreover, the value of the confiscated assets is less than their value when they were seized. This is believed to be the result of a number of factors, such as depreciation in the value of the assets due to the long judicial proceedings, asset mismanagement, and inaccurate assessment of the original value of the assets. However, despite the correlating outside factors, it can be concluded with a high degree of certainty that the total value of the assets confiscated is significantly less than the value of the assets seized, based on the low number of confiscation orders issued.

The efficiency of applying confiscation measures has varied from year to year, reaching peaks between the years 1982 and 1985 and between 1992 and 1994. Legal scholars attribute this improved implementation and enforcement of confiscation orders to social developments. For example, following enactment of Law No. 646 in 1982, which introduced property measures, there was widespread use of confiscation orders, resulting in seized assets with a value of more than 300 billion lira and about 250 billion lira worth of property being removed from convicted Mafiosi or their front men.107 After the first three years of progressive and effective application, there was a steady decline over the next years. Similarly, another peak was noted in 1992 after the murder of two judges—Falcone and Borselino—and subsequent introduction of the 12quinquies law criminalizing “unjustified possession of values,” which authorized confiscation of the assets of those convicted of mafia-type crimes. For 18 months after the law was enacted, the courts used it to confiscate considerable assets, until it was declared unconstitutional by the Constitutional Court. In 1993, the year the law was enacted, from August to the end of the year, 778 items were seized, with an estimated value of 338 billion lira, representing 42 percent of the total value of the assets seized in 1992.108 The law 12sexies, enacted to fill the legal vacuum created by the 12 quinquies, was used sparingly by the courts, resulting in much smaller amounts of seized and confiscated assets, reaching only three percent of the total value of the assets seized and confiscated in 1995.

Netherlands

Conviction based confiscation of illegal proceeds has been possible in the Netherlands since 1983; however, it has been used infrequently due to a number of factors; for example, the requirement to establish a direct link between the assets to be confiscated and an offense, little time devoted to financial investigations, and the inclusion of confiscation proceedings as part of the main trial. Most of these factors were remedied with enactment of the “Strip Them” Act of 1993, which expanded offenses for which confiscation could be imposed, allowed for the separation of confiscation proceedings from the main trial, and provided for confiscation of assets without the requirement to establish a link between the proceeds and an offense in certain circumstances. In the majority of cases, however, the link between the proceeds and a particular offense is required following criminal prosecution. In cases when the causal linkage is not required, prior conviction is still a prerequisite. Furthermore, although the law does not permit in general terms a reversal of the burden of proof, an exception is provided for in Article 36e, paragraph 3, whereby the court can order the defendant to prove legal origin of his or her income. Unique

107Letizia Paoli, “Seizure and Confiscation in Italy,” p. 259 108Letizia Paoli, “Seizure and Confiscation in Italy,” p. 262


Findings 54

to the Dutch confiscation regime is the incorporation of civil forfeiture regime features in certain circumstances, including reversal of the burden of proof and confiscation of the proceeds without the need to link them directly to an offense.

Conviction based confiscation in criminal proceedings

As stated previously, application of the confiscation regime was enhanced with the 1993 Act. The main objective of the law is “to provide an efficient way to prevent the increased number of organized and lucrative forms of international crime, such as drug trafficking, fraud and environmental offenses.”109 the legislature’s intent was to deprive those involved in committing criminal offenses of the economic advantage or financial benefits, by taking away from them, all or part of the gained profits. Confiscation laws were further enhanced with amendments in 2003 and 2005, improving asset seizure and management and introducing special financial investigations.

The main provision on confiscation is Article 36e of the Dutch Criminal Code, providing for two types of confiscation: Ordinary Confiscation and Special Confiscation. Ordinary confiscation (governed by Articles 33 and 33a of the Criminal Code) stipulates that confiscation as a sanction can be imposed when a defendant has been convicted of any criminal offense, and the items derived from the offense or used for commission or preparation of the offense can be confiscated. Special confiscation (Article 36e110) provides that the public prosecution can request the court to impose a measure requiring the defendant to pay a sum of money to the state in relation to the illegally obtained profits acquired from: (i) the offense for which the defendant was convicted (Article 36e, paragraph 1); (ii) similar offenses other than those for which the defendant was convicted, when there is “sufficient evidence” to assume that they also were committed by the defendant (Article 36, paragraph 2); and (iii) profits from offenses for which a fifth category fine can be imposed (fifth category fine is imposed for a number of offenses and is more than €45,000). This measure also can be imposed if a criminal financial investigation suggests that it is likely that illicit profits were obtained by committing other criminal offenses.

To impose confiscation per Dutch law, a prior criminal conviction is always required. Thus both the first and the second variant referenced above require presentation of sufficient evidence to establish a direct link between the proceeds and the offense. The third variant, however, pertains to a situation where a person has been convicted of an offense punishable by a fifth category fine and against whom financial investigation has been conducted and its results suggest that he or she may have acquired illegal profits from other similar offenses. This suggests that the prosecution does not need to establish commission of another offense and prove a direct link between the profits and the offense. The question arises: How does the court assess and determine the advantage of the profits acquired by the defendant from other similar offenses? The literature111 shows that court uses an abstract method of calculation to identify illegally 109 “Measures Concerning Confiscation of Illegally Obtained Profit,” Claire Daams and Ingrid van de Ryet, European Journal of Crime, Criminal Law and Criminal Justice, vol. 5/3, 308–313, 1997 110Section 36e of the Criminal Code

1. At the request of the Public Prosecutions Department, the person who is sentenced for a criminal offense may, by separate decision of the court, be obliged to pay a sum of money to the State in confiscation of illegally obtained profits or advantages.

2. This obligation may be imposed on the person as referred to in subsection one who gained profits or advantages by means of or from the proceeds from the criminal offense as referred to in that subsection or from similar offenses, or from offenses that are punishable with a fine of the fifth category, and of which there is sufficient evidence that they have been committed by him.

3. At the request of the Public Prosecutions Department, a person who is sentenced for a criminal offense punishable with a fine of fifth category and against whom, as a suspect of that criminal offense, a criminal investigation is conducted, may, by separate decision of the court, be obliged to pay a sum of money to the state in confiscation of illegally obtained profits or advantages, if, in view of that investigation, it is likely that offenses or other criminal offenses have in any way resulted in the convicted person having obtained illegal profits or advantages as well.

111 “The burden of proof in confiscation cases; A comparison between the Netherlands and the United Kingdom in the light of the European Convention of Human Rights,” Tijs Kooijmans, European Journal of Crime, Criminal law and Criminal Justice, vol. 18 (2010) 225–236


Findings 55

obtained profits, calculating the assets derived from the defendant during a certain period of time, and determining how much of the acquired profits can be justified on the basis of legal income. If the increase in property cannot be fully explained on the basis of legal sources of income, the defendant is invited to justify that the increase of assets is derived from legitimate resources. If the defendant cannot provide satisfactory evidence to prove legal origin of the assets, the court will assume that the unexplained part of the assets was derived from illegal activities. This represents a reversal of the burden of proof, shifting the responsibility to justify the origin of his or her assets onto the defendant, even though Dutch law does not in general provide for reversal of the burden of proof.

Confiscation in Dutch law is discretionary and is imposed on the request of the public prosecutor. It can be requested at the beginning of the main trial or at any time up to two years after the verdict in the main trial has been reached. A confiscation request also can be issued based on an earlier verdict. A confiscation procedure can be part of the main trial, but more often is conducted in a separate proceeding. The reason for a separate proceeding is to prevent delays in the main case by the thorough financial investigations that are necessary to carry out the confiscation proceedings. However, when financial investigations are not complex, it is possible to have a confiscation request considered during the main trial. The confiscation measure is imposed with a verdict separate from the verdict of the main trial.

If the original assets derived from the proceeds of crime are no longer available, the law allows for value confiscation, whereby the defendant can be ordered to pay a sum of money equivalent to the proceeds or objects acquired. Further, confiscation can be enforced against third parties, if they knew or should have reasonably suspected that the goods had been obtained by means of the criminal offense or represent the proceeds of crime. The value confiscation principle also can be applied to third parties.

The law grants the prosecutor the authority to reach a settlement with the defendant regarding confiscation. Settlement can be reached at any time during the investigation, during the trial, and even after the verdict in the main trial has been read. If a settlement is reached, the defendant is obliged to pay a certain amount of money to the government or to turn over certain objects considered illegally acquired. A settlement agreement does not have any legal effect on the main trial. After a settlement is reached, the criminal financial investigation is closed. A settlement can be made in regard to the whole amount or part of the profit obtained. If it becomes clear later that the profits were larger then assumed, it is not possible to start another confiscation procedure to confiscate the surplus. If, however, the settlement is reached before the final verdict acquitting the defendant is made, the defendant can request reimbursement of the sum of money paid. Such reimbursement is not automatic; the charged person must make a request to have the money or the goods returned.

Financial investigation Two types of investigations are carried out in the course of criminal investigations: a regular financial investigation and a special criminal financial investigation. A regular financial investigation is carried out in all criminal cases; a special criminal financial investigation is initiated when the results of preliminary investigations indicate a likelihood of illicitly obtained benefits that may total at least €12,000. This threshold amount was introduced by the Directives on Special Confiscation. Special investigations are authorized by a judge at the request of the prosecutor and are carried out by the Financial Support Bureaus (FSB) whose sole purpose is to apply confiscation provisions. The FSBs’ role is also to coordinate the information among other institutions involved in implementing the confiscation legislation, such as tax authorities, public prosecutors, and others. The law grants application of special investigative means such as electronic surveillance, undercover operations, house searches, phone taps, and others.

Seizure and asset management Freezing and seizure of instrumentalities of crime is regulated by Articles 94–126 of the Criminal Procedure Code. The law allows for seizure and freezing of assets to secure the return of the objects or items derived from the crime or to ensure execution of a future confiscation order or payment of a fine. The seizure order is issued by a judge acting either ex officio or


Findings 56

on the request of the public prosecutor; in the case of special financial criminal investigations, authorization of the public prosecutors is required. The seizure is carried out by the police.

Management of seized and confiscated assets is entrusted to the Prosecution Service Criminal Asset Deprivation Bureau (BOOM). The agency has the authority to make all decisions pertaining to management of seized assets: (i) to appoint an administrator; (ii) pay the seizure costs from the state coffers; or (iii) authorize delineation, destruction, abandonment, or use for a purpose other than the investigation. Assets ordered for confiscation are transferred to the state unless there are claims of damage from victims.

Effectiveness To facilitate implementation of the confiscation law, BOOM is set up to assist public prosecutors with investigations. Most courts have specialized chambers for confiscation matters and there are four specialized prosecutors at the BOOM who assist local prosecutors in the most serious criminal cases. Further, the Board of the Procurator General drafted “Directives on Special Confiscation” providing guidance to prosecutors to ensure efficient and uniform application of the confiscation provisions.

Given that confiscation is conviction based, prosecutors have no difficulties in confiscating the proceeds considered to be derived from illicit activities. The existence of the extended confiscation regime has made it possible to widen the application of confiscation to proceeds derived from other offenses, other than the one for which the defendant was convicted. Although measures are discretionary, they always are applied in organized crime cases.112 Seizure of assets is extensively applied and has proved effective in obtaining evidence for proceedings, including confiscation and the main offense.

However, despite the progress made in applying confiscation provisions, there are considerable difficulties. One of the main issues raised is the quota of ten cases per year, which every public prosecutor must fulfill. Introducing this quota as a performance standard has enticed some prosecutors to pursue minor and less important cases rather than important and more time-intensive cases.

Switzerland

Switzerland is a federal state, made up of 26 cantons, whereby criminal law is a matter of federal law. Switzerland has a civil legal tradition and the criminal law is codified in the Penal Code and the Penal Procedure Code, which are based on the principle of legality, meaning that no one can be charged for an offense that is not classified as such in the criminal code. The principle is introduced in the Criminal Code to protect defendants from arbitrary judicial decisions. The legislative body of the country has the power to determine which actions are classified and legislated in the criminal code as criminal offenses, for commission of which any person can be accused, prosecuted, and convicted.

Swiss law provides for both conviction and non-conviction based forfeiture laws. Both proceedings are governed by the same provision in the Criminal Code and the same procedures of the Criminal Procedure Code. Both confiscation proceedings in rem and in personam are conducted in criminal proceedings. Swiss criminal law does not provide for forfeiture of criminal assets in civil proceedings.

112 Barbara Vettori, “Tough on Criminal Wealth; Exploring the Practice of Proceeds from Crime Confiscation in the EU,” Netherland, 89–94


Findings 57


Conviction based confiscation of the proceeds of criminal law is governed by Articles 69–72 of the Swiss Criminal Code, and is mandatory. Article 69 of the Criminal Code governs conviction-based confiscation, authorizing the judge to confiscate the proceeds resulting from the commission of an offense as well as the instrumentalities of the crime, and objects used or intended to be used for the commission of the offense. Confiscation following conviction is mandatory and is deemed a supplementary measure to the prime penalty imposed by the court.

Alternatively, the Swiss Criminal Code provides for independent criminal confiscation proceedings to be initiated against the property in rem in cases when the defendant cannot be identified or has absconded. Article 70, paragraph 1 states “the judge shall order the confiscation of assets resulting from an offense or which were intended to induce or to reward the offender, provided that they do not have to be returned to the injured party to restore his or her rights.” Forfeiture is ordered against absent defendants, because this is an in rem forfeiture, it is not important who the owner is as long as these assets are known to be proceeds of crime. Swiss Criminal Code has adopted a broad concept of assets to include all valuable objects, items, economic advantages, and indirect benefits. The code sets forth provisions whereby the assets will not be confiscated if they were acquired by a third party not knowing of their criminal origin and if the measure is considered excessively harsh. The right to order confiscation of assets is subject to statutory limitation of seven years, unless the offense of which the defendant is accused has a longer prescriptive period, in which case the later applies. After the confiscation order is issued, the court is obliged to officially announce it, whereby interested third parties are given an opportunity to claim their interest in the property, which rights expire five years after the official announcement is made.

The burden of proof is on the prosecution, which is required to establish the link between the offense and the proceeds, under criminal standard of proof. The prosecution must establish that an offense was committed and that the property or assets were derived from commission of a particular offense, or have resulted from or were intended for commission of an offense. Although the standard of proof is criminal, it represents a lower standard of proof, called “intimate conviction,” meaning that the judge must be intimately convinced that the assets are the proceeds of an offense. For intimate conviction to exist, it is not necessary for there to be proof; rather, an “accumulation of clues” is deemed sufficient to convince the judge of the offense. However, when it concerns criminal organizations, Swiss law provides for reversal of the burden of proof; therefore, when a person is suspected to be a member of or to have supported a criminal organization, he or she will have the burden to prove the lawful origin of his or her assets (Article 260 of the Criminal Code). This legal statutory presumption comes into play and the burden of proof passes to the suspect only in cases when the person is liable for prosecution for membership in or support of a criminal organization.

To order the confiscation of assets considered to be the proceeds of crime, the criminal offense must be classified as such in the Criminal Code or other criminal laws in Switzerland (principle of legality), and must be within the jurisdiction of Swiss authorities. An exception is provided for proceeds derived from narcotics offenses, in which circumstances the Federal Law on Narcotics applies. This law provides that assets can be forfeited even in cases when the Swiss criminal justice authorities have no jurisdiction to prosecute the offenses, but the proceeds have been derived from drug-trafficking offenses.

The court also can order compensatory claims, or payment of an equivalent value assessed by the judge to have derived from the crime, if the actual proceeds are no longer available, if they have been spent, or if they have been otherwise disposed of by the defendant. The defendant is obliged to pay the amount set forth by the judge. From the amount received, the court may fulfill the claims of injured or third interested parties (Article 71 of the Criminal Code).

Article 305-bis of the Criminal Code sets forth the provisions incriminating money laundering offenses with respect to the confiscation of the proceeds of crime. The law provides that persons who obstruct the


Findings 58

discovery or the confiscation of assets that they knew or should have known to be derived from an offense are liable for up to three years of imprisonment.

To prevent dissipation, loss, or transfer of assets to third parties, Swiss Criminal Procedure Code sets forth provisions governing the seizure of assets (Article 65 of the Criminal Code). The investigative judge and the federal prosecutor have the power to ask the court to issue an order to seize or freeze assets. For the court to issue a seizure order there must be serious circumstantial evidence of a direct or indirect link between the assets for seizure and an offense. Seizure can be applied to movable and immovable property or property purchased with the proceeds derived from criminal activity, even if only part of the purchase was made with the proceeds of unlawful origin. The seizure order will remain in effect until the court makes a final decision regarding the property subject to seizure.

The amount of information available to evaluate the effectiveness of the implementation of the law is insufficient on which to base relevant informed conclusions. According to the GRECO Second Round Evaluation Report,113 there have been six court confiscation orders in the past 3 years, two of which are corruption cases.

3.1.4 Countries that have illicit enrichment targeting PEPs, reversing the burden of proof to the defendant in a criminal proceeding

A considerable number of countries worldwide have developed legislation known as illicit enrichment that targets politically exposed people including public officials of all levels that may have acquired assets as a result of corruption or abuse of official position. We have chosen to depict only a couple of countries implementing illicit enrichment law. For a more exhaustive and comprehensive review, the World Bank is conducting a study on Illicit Enrichment laws worldwide.114

Hong Kong

The legal system of Hong Kong, as described by the Hong Kong Department of Justice, is “one country two systems.” The Basic Law of the Hong Kong Special Administrative Region (HKSAR) was enacted in 1990 and came into effect in 1997. It was enacted in accordance with the Constitution of the People’s Republic of China and contains a feature whereby the socialist system and policies of China shall not be practiced in HKSAR; thus, the previous capitalist system remains unchanged for another 50 years. This provides an avenue for continuation of all previous laws and ordinances of the former system, including those related to confiscation and forfeiture regimes.

Legislation governing confiscation and forfeiture regimes in Hong Kong was enacted during the British rule and little has been done to amend or upgrade them. Provisions targeting proceeds derived from drug trafficking and other serious offenses were passed in two different legislations; in 1989 the Drug Trafficking (Recovery of Proceeds) Ordinance (DTROP) and in 1990 the Organized and Serious Crime Ordinance (OSCO). In addition, in 1997 Hong Kong enacted the Prevention of Bribery Ordinance to combat and eradicate corruption, which has a provision on the Possession of Unexplained Property. Although the Hong Kong confiscation regime is considered advanced and moderate, it has seen very little development in this area since it became a special administrative region of China, with the exception of the anti-terrorist financing legislation enacted in 2002–2004. A recent evaluation conducted by FATF concluded that Hong Kong has a good legal structure to combat money laundering and the terrorist financing system, fully meeting FATF requirements, with more work to be done in the area of terrorist financing.

Confiscation of proceeds derived from drug trafficking and serious offenses

Both DTROP and OSCO provide powers for confiscation of property following conviction for drug trafficking, serious offenses, and inter alia for corruption cases. Although the offenses listed in Schedules 113 GRECO Joint First and Second Evaluation Round 2007, Evaluation Report on Switzerland 114 World Bank is in the process of publishing a report on effectiveness of Illicit Enrichment.


Findings 59

1 and 2 include many serious offenses, they do not include all indictable offenses; for example, tax evasion is not included in the specified offenses. Although it is held that the proceeds of many offenses not listed in Schedules 1 and 2 can still be captured through the money-laundering provisions, with the requisite mensrea, whereby one deals with the proceeds of any indictable offense, the person also commits money laundering; therefore, proceeds of an offense can come under the scope of the confiscation provisions in OSCO.115 Both laws apply to properties in Hong Kong and are retroactive, including offenses committed before the Act came into effect.

Restraining orders Both DTROP and OSCO contain powers for the restraint and charging of property to satisfy a confiscation order. A restraining order prevents the defendant from dealing with the property; the charging order imposes a charge on the property to secure a payment of money to the government equivalent to the value of the property. Restrained property can be seized by an authorized officer to prevent the property from being disposed of or otherwise transferred from Hong Kong. The court issues a restraining order if proceedings against the defendant were commenced and if it is satisfied that there are reasonable grounds to believe that the defendant has benefited from a drug-trafficking or other serious offense. This has been recently amended to allow a restraining order to be issued earlier in the process so that there is less time for the defendant to dispose of his or her assets. A restraining order can cover all of the property owned or in possession of the defendant, including property acquired through legitimate means, to ensure that if a confiscation order is issued the property can be used to satisfy the confiscation order. After the restraining order is issued, the court appoints an interim receiver to manage and control the property.

Confiscation orders After the defendant has been convicted of a drug-trafficking or other serious offense, on the prosecutors application, the District Court or High Court must order confiscation if it is satisfied that the defendant has benefited from the committed offense of which he was convicted. If the defendant fails to pay the amount specified in the conviction order, the court will impose a term of imprisonment. The length of the term, similar to that of the Singapore confiscation regime, will vary depending on the amount specified in the confiscation order and set to be paid to the government. If the prosecution applies for an organized crime offense, the scope of the confiscation order will be wider. When filing the application for a confiscation order the prosecutor must file a statement providing the facts to support the application. This statement is considered by the court as conclusive except for the facts that the accused has not accepted. The accused also is required to submit a statement on the amount that might be realized at the time the confiscation order is issued. The rights of third parties are not taken into account when the confiscation order is issued, and there are no opportunities for them during the proceedings to make an application to protect their interests.

Confiscating proceeds of corruption

The Proceeds of Bribery Ordinance (PBO)116 has specified that the corruption occurs when an individual abuses his or her authority for personal gain at the expense of other people. The PBO does not incriminate only the person receiving the benefit, but also the person bribing the public official. The statute also covers or is applicable to all public and private companies. Public bodies include the government, executive council, legislative council, any district council, any board, commission, committee, or other body, whether paid or unpaid appointed by or on behalf of the chief executive. The Independent Commission against Corruption(ICAC), established by the Independent Commission Against Corruption Ordinance, has the powers to investigate corruption offenses, to arrest, and to detain those suspected of being engaged in corruption offenses, and is permitted to search and seize property.

115 “Civil Forfeiture for Hong Kong: issues and prospect,” Simon N.M. Young 116 Available at: http://www.legislation.gov.hk/blis_pdf.nsf/6799165D2FEE3FA94825755E0033E532/660A25EA15B8C9D6482575EE004C5BF1/$FILE/CAP_201_e_b5.pdf, accessed March 17, 2011


Findings 60

The PBO empowers the ICAC to apply ex parte to a First Instance Court for a restraining order. A restraining order may cover all of the property of the suspect, whether it is held by the suspect or a third party. The court can revoke or vary the restraining order on the request of the suspect or a third party. Even though the Act provides for a restraining order, once the suspect has been convicted of a corruption offense, the PBO does not provide for the forfeiture or confiscation of the property. At this stage, to enforce confiscation, the prosecution must rely on OSCO, which also applies only to a limited number of corruption offenses, including bribery, bribery for giving assistance in regard to contracts, bribery for procuring withdrawal of tenders, and corrupt transactions with agents. However, the PBO confers a confiscation power only for the purpose of confiscating assets of a government servant who has been convicted of possession of unexplained property. This provision (s.10) provides that any person who is a chief executive officer or a prescribed officer is guilty of an offense if he or she (a) maintains a standard of living above that which is commensurate with present or past emoluments or (b) is in control of pecuniary resources or property disproportionate to his or her present or past emolument, unless he or she gives a satisfactory explanation to the court as to how he or she was able to maintain such a standard or how such pecuniary resources or property came under his or her control. If the suspect is the chief executive officer, the court will evaluate the truthfulness of his or her statement by taking into account the assets that the suspect had declared to the chief justice. The court will presume, if satisfied that a third party has close relationship with the suspect, that any pecuniary resources or property held by him or her, unless the contrary is established, are in control of the suspect.

Section 10 of the statute shifts the burden of proof to the suspect/defendant to explain the legitimacy of his or her property. The court also will use prior disclosure of property documents filed by the suspect holding the public office. If a suspect is convicted of an offense under section 10, he or she will be fined up to $1,000,000 and subject to imprisonment of 10 years. Section 24 of the statute stipulates that in all proceedings against a person suspected or accused of having committed an offense under the statute, the burden is with the suspect or the accused.

On conviction of the defendant for possession of unexplained property, the court may, in addition to any penalty, order the confiscation of any pecuniary resources or property up to an amount not exceeding the amount or value of the pecuniary resources or property, the acquisition of which was not explained to the satisfaction of the court. The Secretary of Justice is authorized to make an application for confiscation within 28 days after conviction. The statute provides safeguards for property held or controlled by other persons, holding that his or her property will not be confiscated unless sufficient notice is given to the owner or if a third party was able to satisfy the court that he had acted in good faith when holding or controlling property or pecuniary resources for another person.

Section 10 of the PBO, on unexplained property, has been subject to criticism by many scholars. The main criticism is related to the way the offense is structured. It was held that unexplained wealth as it is drafted becomes an offense only if the person subject to an investigation is not able to satisfy the court of the origin of his or her property. The problem lies in that the provision does not connect unexplained wealth to a corruption offense:

Any person who, being or having been a Crown servant – (a) maintains a standard of living above that which is commensurate with his present or past official emoluments; or (b) is in control of pecuniary resources or property disproportionate to his present or past official emoluments shall, unless he gives a satisfactory explanation to the court as to how he was able to maintain such a standard of living or how such pecuniary resources or property came under his control, be guilty of an offense.117

Further, it was held that it is uncertain whether the statement “satisfactory explanation” relates to satisfying the court that the wealth is not derived from a corruption offense or does it investigate the

117 Section 10, Proceeds of Bribery Ordinance 1980


Findings 61

acquisition of the official’s wealth. Two cases have examined the unexplained property section of the PBO. In Privy Council in Mok Wei Tak and another v. The Queen,118 the court gave section 10 a broad meaning, stating that section 10 will be breached if an official has a standard of living or wealth disproportionate to his or her official emoluments, and that the offense consists of two ingredients: (1) control of resources or standard of living disproportionate to official income and (2) the defendant knows that he or she will be unable to give a satisfactory explanation as to the source of the funds sufficient to persuade a court at trial. It was held that the prosecution needs only to prove excess wealth for the burden to shift to the defendant. The Privy Council did not consider the impact of the reversed burden of proof on human rights, but this was later reviewed by the Hong Kong Court of Appeal in Attorney General v. Hui Kin-hong.119The court upheld section 10, stating that it has proved its effectiveness in the fight against corruption. The court concluded that section 10 is dictated by necessity and goes no further than necessary. Wilsher considers that court analysis is perfunctory and is focused on effective law enforcement with no consideration of alternative means of prosecuting corruption.120 Any person convicted of the corruption offense will be ordered by the court to pay a specified amount or value or any advantage benefited as a result of the offense to a public body. The order will be enforced in the same way the civil judgments of the High Court are enforced. The statute differentiates between enforcement of confiscation orders for corruption cases in the public sector and the private sector. In the private sector, law enforcement and the prosecutor’s sole responsibility is to inform the principal of issuing the order, and the principal will decide whether to enforce it or not. In public sector corruption cases, law enforcement and the prosecution will be involved to enforce the civil order.

The statute permits a third party holding or having control over property or resources to appeal the decision to the Court of Appeal. The defendant has a right to appeal against the sentence as provided for in Part IV of the Criminal Procedure Ordinance.

Investigative powers The statute provides broad investigative powers to the ICAC commissioners and its investigating officers when investigating alleged corruption offenses. The statute empowers the commissioner or an investigating officer to apply ex parte to the Court of First Instance to issue an authorization order in writing, permitting the investigating officer to investigate any account, books, documents, or other materials related to the person who is suspected of committing an offense. The authorization also may empower the commissioner or the investigator to require any person to produce books, documents, or other articles related to the suspect. Any person failing to comply with the orders without a reasonable excuse shall be guilty of an offense and shall be fined up to $20,000 and subject to imprisonment for one year.

Further, the commissioner or investigating officer may apply, and the Court of First Instance may issue, an order requesting the Commissioner of Inland Revenue or any other officers to produce material for the commissioner or to give them access to it. Similarly, an order can be issued by the Court of First Instance authorizing the commissioner to request any person to provide information related to the suspect, if the court is satisfied that there are reasonable grounds to believe the person has information that may be relevant to the investigation. However, the statute provides for the protection of privileged information obtained in the course of conducting business, and such protections will be extended to clerks or servants employed by the legal advisor.

Finally, it is important to add that all three ordinances create a duty for all citizens to report suspicion or knowledge of any of the offenses to an authorized officer. Persons providing information to law enforcement are protected by the virtue of section 26 of the statute, based on which no witness is required to appear in court unless ordered by a court itself; their identity is protected and must not be revealed.

118 (1990) 2 AC 333 119 (1995) 1HKLR 227 120 “Inexplicable wealth and illicit enrichment of public officials: A model draft that respects human rights in corruption cases,” Dan Wilsher,Crime, Law &Social Change (2006) 45:27–53


Findings 62

Singapore

Singapore’s legal system is based on the English common law system. A unique characteristic of Singapore’s legal system is that it has evolved into a distinctive jurisprudence, continuing to absorb practices from common law as well as best practices from other mature legal systems. These developments in Singapore law reflect an acute awareness of the need to recognize and accommodate current international business and commercial practices.

In July 1989, the Corruption (Confiscation of Benefits) Act was enacted to provide for a more effective mechanism in the confiscation and recovery of corruption benefits, especially in relation to unexplained benefits and benefits of persons who die or abscond while under investigation. The Confiscation of Benefits Act was later strengthened, and in 1999 was renamed the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA), as the primary instrument for criminalizing the laundering of benefits derived from corruption, drug trafficking, and other serious crimes, as well as allowing for the investigation and confiscation of such benefits. Before the CDSA was passed, the money-laundering regime was governed primarily by two separate acts: the Corruption (Confiscation of Benefits) Act and the Drug Trafficking (Confiscation of Benefits) Act.

The CDSA is conviction-based asset forfeiture, providing for forfeiture of proceeds of benefits derived from criminal conduct following conviction of the defendant for drug-trafficking and other serious offenses. The CDSA does not address confiscation of any property that constitutes instrumentalities used in or intended for use in commission of drug-trafficking or other serious offenses. The purpose of the CDSA is to take out the profit from the crime by depriving the criminal of ill-gotten gains. The CDSA covers two main categories of predicate offenses—“drug trafficking offense”121 as well as foreign drug-trafficking offenses,” and “serious offense”122 and foreign serious offenses, whether committed before or after the CDSA came into force. The CDSA applies to any property, whether is located in Singapore or elsewhere, demonstrating the cross-border effects intended by the CDSA.

Restraining powers The CDSA enables the High Court to issue a restraining or charging order. A charging order imposes on any property a charge for securing the payment of money to the government. Similarly, the restraining order prohibits anyone from dealing with the property subject to the restraining order. The High Court will issue a charging or restraining order on application by the prosecutor, if it is satisfied that there are reasonable grounds to believe that the defendant has derived benefit from a drug offense or from criminal conduct, if proceedings have been instituted against him or her, and if the proceedings have not been concluded. The High Court also can issue an order restraining the property if the defendant has been officially notified that he or she is under investigation for a drug offense or criminal conduct before charges are made or the defendant has been convicted of an offense. If the defendant acquires additional property the court may increase the confiscation order by that amount. If proceedings are not instituted within three months the court will discharge the restraining order. A restraining order can be issued ex parte. Police are authorized to seize property if there is a risk that the property may be removed from Singapore. Seized or restrained property is entrusted to the public trustee or a receiver who manages, takes possession of the property, and realizes any realizable property.

Confiscation powers Part II of the CDSA empowers the court, on application by the public prosecutor, when a defendant has been convicted of one or more drug or serious offenses, to issue a confiscation order against the defendant in related to the benefits derived from drug trafficking or criminal conduct, if the court is satisfied that such benefits have been so derived. The court will make a determination of the amount to be recovered from the defendant and, if necessary, will consider the evidence reviewed in the main proceedings against the defendant. In cases where the court is unable to do so, the registrar will

121Offenses included under the First Schedule, including offenses from the Section 5,6,7,10,43,46 of the Misuse of Drug Act. 122Offenses included as serious offenses under the Second Schedule, including conspiracy, incitement, attempt and abetment of these offenses. Offenses from the Penal Code (Cap. 224) as well as offenses under other specific legislation relating to bribery, hijacking, kidnapping, vandalism, prostitution, etc.


Findings 63

make the determination. The court will confiscate the property of a person considered to have absconded if it is satisfied on balance of probabilities that the person has absconded and that investigations for a drug-trafficking or other serious offense have been commenced against him or her.

Sections 4 and 4A shift the burden of proof to the defendant. Sections 4 and 6 provide that a court will presume that if the defendant has at any time held property or an interest disproportionate to his or her known sources of income, it was derived from drug-trafficking offenses, unless the defendant is able to adduce evidence to justify the legitimacy of his or her assets. Similarly, per sections 4A and 7, any expenditure incurred by the defendant will be presumed to have been met out of proceeds unless the defendant is able to establish the contrary. Statutory presumptions pursuant to section 4 apply to the property of a deceased defendant (s.28), and proceedings will be instituted against his or her personal representative and his or her estate may be confiscated, although no imprisonment would be imposed against the personal representative or any beneficiary. Any question of fact to be decided by a court in proceedings under the CDSA is decided on the balance of probabilities, except when the prosecution is required to prove in any proceeding the commission of an offense. When issuing the order, the court will accept conviction as conclusive unless it is subject to review, it was quashed or set aside, or the issuing of an order is not in the interest of justice or the public interest. In addition to the provisions shifting the burden to the defendant, section 9 of the CDSA provides an opportunity for the defendant to rebut the prosecutor’s tendered statement. If the defendant fails to respond, the court will consider his or her silence as acceptance of the allegations. Alternatively, the defendant can accept or challenge orally or in writing the allegations made by the prosecution and the statement will be considered admissible evidence.

The CDSA empowers the court to determine the amount to be recovered from the defendant based on the court’s assessment of the value of the benefits, issued in writing in a certificate. Benefits are defined in the CDSA to be any property or interest, including income accrued from such property or interest held by the person at any time before or after enactment of the CDSA, that is disproportionate to known sources of income. The amount to be recovered can be reduced or increased, either on prosecutors’ or receivers’ application. The defendant is required to pay the recoverable amount; if he or she fails to do so, the defendant will be liable for interest on that sum. The CDSA prioritizes fulfillment of debts and obligations from the confiscated property.

The CDSA also provides for the protection of rights of third parties. Any third party with an interest in the property may apply before or during the proceedings to protect his or her interest. The court will issue an order declaring the nature, extent, and interest in the property if satisfied that the person with an interest in the property was not involved in the defendant’s illegal activities and that he or she acquired interest without knowing and in circumstances that do not arouse suspicion that the property was involved in or derived from drug trafficking or criminal conduct. Part III of the CDSA allows the court to impose imprisonment on the defendant if he or she fails to pay an amount ordered in the confiscation order; the term of imprisonment can be ordered as follows: if the amount does not exceed $20,000, imprisonment not exceeding two years; if the amount exceeds $20,000 (SGD), imprisonment up to five years; for an amount exceeding $50,000(SGD), but no more than$100,000(SGD), imprisonment of seven years; and for an amount exceeding $100,000(SGD), imprisonment of ten years.

Information-gathering powers The CDSA gives broad powers to the court to collect information and materials that may be useful for the investigation. The police officer conducting the investigation is required to apply to a court to access material evidence that may be in possession of a third party or the defendant. The court will issue an order directing a person to produce material or give access to those materials to the authorized officer only if the court is satisfied that there are reasonable grounds to believe that a specified person (defendant) had carried on or has benefited from a drug-trafficking offense or criminal conduct and that there are reasonable grounds to believe that the material subject to application are of substantial value for the investigation and do not include items subject to legal privilege. Further, the court must be satisfied that there are reasonable grounds to believe that obtaining these materials is in the public interest, will benefit the investigation, and will help in explaining the circumstances under


Findings 64

which the person came into possession of these materials. Provisions under this section protect items subject to legal privilege. However, no one will be precluded from a production order under the justification that it might incriminate or make the person liable to a penalty. If a person fails to comply with a court order or provides false information, he or she will be liable to a fine not exceeding $10,000(SGD) or to imprisonment not exceeding two years or both.

In addition, the High Court may, on application by the Attorney General, issue an order directing a financial institution to produce the materials to the Attorney General or to the authorized officer. This also requires that it be satisfied that there are reasonable grounds to suspect that a person has carried out or has benefited from a drug-trafficking offense or criminal conduct and that there are reasonable grounds to believe that the materials that are the subject of the application are of substantial value for the investigation. Cooperation of the financial institution with the court order will not be considered a breach of any restrictions on information disclosure imposed by law and the institution will not face any action for material produced in good faith.

Search powers On application by an authorized officer, the court may issue a search or warrant authorizing the officer to enter and search premises if the court is satisfied that a person has committed or benefited from offenses (provided for by the CDSA) and there are reasonable grounds to believe that on the premises are materials of substantial value to the investigation. The officer conducting the search is authorized to seize and retain any material, other than items subject to legal privilege. Persons obstructing the officer are subject to a fine of up to $10,000(SGD) or imprisonment of up to two years.

The CDSA contains provisions specifying the obligations of financial institutions in retaining records and their obligations to disclose them to an authorized officer. The CDSA also imposes a responsibility on anyone who has reasonable grounds to suspect that a property represents proceeds of or was used or is intended to be used in connection with drug trafficking or criminal conduct, and the information came to his or her attention in the course of his or her profession, business, or employment, requiring him or her to disclose the knowledge to an authorized officer. Failure to do so can result in conviction and a fine not exceeding $10,000(SGD). Advocates and solicitors and their clerks and interpreters are excluded from this duty.

Finally the CDSA provides for compensation of a person against whom an investigation for drug trafficking or criminal conduct is initiated, but where the person was never convicted of or the conviction was quashed or the person is granted a pardon. The court will order compensation to be paid by the government if the person makes an application and if the court is satisfied that there was some serious default on the part of the prosecution and the applicant has suffered serious loss.


Country Focus 65

3.2 Comprehensive Analysis of the UWO in Two Selected Countries This section of the report describes the process of seizure and forfeiture of property under UWOs in two selected countries: Australia and Ireland. For each country, it provides a brief overview of the policy debate surrounding introduction of UWOs, assesses their effectiveness, and identifies key bottlenecks and key challenges faced in the implementation of the statutes.

After considering a large number of countries that provide for reversal of burden of proof in conviction and non-conviction based forfeiture proceedings, the study team identified three countries that met the criteria determined by the research team, key of which are; i) that it is a non-conviction based asset forfeiture proceeding; ii) there is no requirement for a predicate offense; and, iii) the burden of proof shifts to the respondent to show lawful source of property. These three countries are Australia, Colombia, and Ireland. Because the study called for a comprehensive analysis in two countries, the team has focused on Australia and Ireland, primarily because they are both common law countries and are well-established democracies with effective and impartial law enforcement and judiciary, which, based on the team’s findings, are key preconditions for application and effective use of UWOs. Moreover, Australia was the first country to identify its legislation specifically as UWO. Nevertheless, with some minor nuances, each of the three countries contained all three the elements of UWOs described above. The nuances include a varying degree between different statutes regarding the predicate offense. While some statutes had no requirement to show a connection between the property and any criminal activity (e.g., Western Australia and Ireland), the Criminal Asset Bureau in Ireland, in most of the cases, established, on a lower standard of proof, reasonable suspicion that the respondent was engaged in some criminal activity. And the Australian federal UWO contains a clear provision requiring that a connection between the property and an offense is shown. Some of these differences are incorporated in the statute while others arose during the practical application of the laws. In either case, we assume these nuances still reach the threshold of a pure UWO for the purposes of this study

UWOs while widely embraced and promoted by law enforcement officials are awaited with skepticism and criticism by human rights groups, academics and private attorneys. European countries, except for Ireland and Italy, have in large part stayed away from introducing non-conviction based asset forfeitures and have been critical of Irish legislation considering it a drastic response to organized crime with a potential to erode fundamental human rights. The Supreme Courts in both Australia and Ireland have upheld the constitutionality of these laws but have characterized them as draconian. Moreover, the courts have justified them as a measured and proportionate response to the crime and the threat organized and serious crime poses to society. In contrast, some academics believe the law if not carefully and appropriately targeted can violate basic rights of the individual. Similarly, members of the defense bar believe that powers vested in the state are too far reaching and create a gross imbalance of power between the respondent and the state.

In most cases, the main concern expressed by legislators, legal professionals, and others is the possibility for abuse of power under the Act. In the study’s review of a considerable amount of case law, and during the team’s interviews with representatives of various agencies engaged in implementing the law, this issue was addressed by cautiously and vigilantly choosing cases. In Ireland there was not a single case that was criticized or flagged by attorneys, media or public as a case that should not have been brought under the UWO proceedings. Western Australia, on the other hand, did have one such case when the public and media negatively reacted to the application of UWO in respect of an elderly couple whose house was confiscated after their son concealed drugs on their property.123

123 Clarke 2004, “Elderly drug dealers lose their appeal’ Sydney Morning Herald 15 March 2005


Country Focus 66

Finally, it is important to identify the areas of criminal activity in which the Act is being used. The major areas of criminal activists against which the Act has been used are drug-trafficking offenses, financial fraud, tax fraud, and corporation offenses.

Although it was stated in the beginning of this study that it is difficult to evaluate the effectiveness of the civil forfeiture regime, conclusions can be drawn on the basis of indicators that show the impact of the Act. In Ireland, both the anecdotal and statistical evidence lead us to believe that the PoCA and the CAB, with its extensive powers, have had a positive impact in reducing criminal activities in Ireland. Statistics show that the CAB has used these powers extensively. And the available data on the number of cases commenced by the CAB and the number of orders made, as well as the successful application of the cases, show that the CAB has continued to work consistently in attacking proceeds of crime and that it is doing it successfully.


Country Focus - Australia 67

3.2.1 Australia

This section of the report reviews the history and background of the confiscation and forfeiture laws in Australia that led to the introduction of UWOs, and reviews the confiscation and forfeiture statutes of Western Australia (WA), Northern Territory (NT), and the recently enacted federal (Commonwealth) law. The final section focuses on the effectiveness and the use of such laws in WA and in the Commonwealth, challenges and obstacles faced in the course of implementation, and lessons learned.

Australia was one of the first countries to enact unexplained wealth provisions as part of its non-conviction–based forfeiture regime as a mechanism to fight serious and organized crime by depriving those who have engaged in unlawful activities of their illegally gained profits. Beginning first at the State or territory level, they have been in existence for more than ten years in WA and since 2003 in NT. Victoria, Queensland, and South Australia have comprehensive forfeiture statutes including conviction and non-conviction processes that contain many aspects of UWOs. Only within the past year have similar laws been enacted at the federal level, and also in the state of New South Wales (NSW).

The History of UWOs in Australia

The legal basis for confiscation laws in Australia was founded in ancient principles of common law known as deodant and attainder,124 which permitted confiscation of property if a person committed a serious offense of treason or other felony. All the ancient forms of forfeiture had been abolished by the beginning of the 20th century, initially in England and later in other common law countries, including Australia. In rem forfeiture is a recent development, introduced in the Australian Customs Act of 1901 and in the Fisheries Management Act of 1991. In 1997, the Australian government introduced Section 229A in the Customs Act, enabling the state to require forfeiture of contraband and conveyances related to contraband, if, on the balance of probabilities, it was established that the goods were derived from dealing with prohibited narcotic imports. Because this regime did not yield the expected results, the Act was amended, introducing Division III, which empowered the state to require forfeiture of contraband and conveyances, introducing in personam civil forfeiture. Under these provisions, the government was able to recover pecuniary penalties, in a civil proceeding, equal to the benefit derived from dealing with narcotics. Note that this regime represented the first in personam forfeiture regime e in a civil proceeding without a prerequisite requirement for conviction or charge of an offense, or the need to establish that specific property derived directly or indirectly from an offense. This regime was the foundation of future forfeiture laws in Australia.

The initiative for comprehensive confiscation and forfeiture laws can be traced to the early 1980s when the Australian Police Ministers Council (APMC) extended an invitation to the Standing Committee of Attorney General (SCAG) to draft comprehensive and uniform legislation that provided for confiscation of criminally derived property and prevention of unjust enrichment. A number of Royal Commissioners and Justices advocated for enactment of non-conviction–based confiscation laws as the most appropriate response to crime. They argued that the existing approach, whereby confiscation was considered as a measure imposed against the individual for his or her wrongdoing, should be altered to a broader approach and be focused on unjust enrichment. Unjust enrichment, as a concept, is not focused on wrongdoing of the individual but on the property acquired through illegal activities.125 As such, the

124Deodant involved the confiscation of instruments or objects used in the commission of an offense. Attainder is forfeiture of both real and personal property. Under the doctrine of “corruption of blood”, on conviction of a person for a felony or treason, his or her entire property was confiscated to the King or Feudal Lord. Source: Ben Clarke “Confiscation of “unexplained wealth” Western Australia’s response to organized crime gangs, ” South African Journal of Criminal Justice, vol. 15, 2002, p. 61–87. 125 The concept of unjust enrichment was for the first time mentioned by the Australian Law Reform Commission in the report “Confiscation that Counts”, Knoting. That is that the development of the common law in this area is driven by a public policy recognition of the notion that persons ought not, as a matter of principle, be permitted to become unjustly enriched at the expense of others. This is seen by the Commission as a significant broadening of the common law which formerly recognized the concept of unjust enrichment (albeit not in those precise terms) in a more limited way through particular rules such as that denying a person who has unlawfully caused the death of another person from benefitting from the estate of that person”.



property should be forfeited unless the property owner is able to prove the legal origin. The concept of unjust enrichment laid the foundation for future UWOs. Accordingly, Justice Moffitt called for civil forfeiture laws to be modeled on existing tax laws. He stated that, “tax authorities can call on taxpayers to account for assets which appear to exceed their income…. It is difficult to see why in the face of serious organized crime a statute could not be drawn to provide that in prescribed circumstances.”126 However, these suggestions were not incorporated in the SCAG sponsored legislation, conviction-based confiscation model in 1985, which was enacted in 1987 as the Proceeds of Crime Act (PoCA). It has been argued by Lusty127 that this was done partly because the government wanted to enact uniform laws across Australia and partly because the United Kingdom had previously enacted similar legislation. Following enactment of the PoCA, all of the states adopted statutes mirroring the provisions of the federal statute, enacting conviction-based confiscation laws.

The PoCA of 1987 provided for confiscation following a defendant’s conviction of an offense, whereby in a civil proceeding the court would determine whether or not the defendant had benefited from the commission of an offense and the value of the benefit. However, an important feature was incorporated into the statute, the so-called statutory forfeiture, whereby all of the property belonging to a person convicted of a serious offense would be confiscated within six months, unless the respondent was able to show that that property or parts of it were lawfully acquired. Thus, the concept of the reversal of the burden of proof in specific circumstances can be traced to the PoCA of 1987, showing its long history in Australia and justifying its acceptability by society and the courts. Further, here we first see the presumption that all of the property is the product of unjust enrichment.

At the outset, conviction-based confiscation law was not meeting expectations of depriving criminals of illegal assets. At the time of its enactment, it was estimated that organized crime in Australia in one year would generate between AUD$1B-4.5B, with an average annual confiscated amount of at most AUD$7.5M.128 Based on statistical data from 1995 to 1998, however, the total amount of confiscated assets under the conviction-based regime was AUD$14.39M (US$15.6M), averaging AUD$3.6M (US$3.8M) per year. In 1999, these figures decreased to AUD$2.7M (US$2.9M) in Queensland and AUD $2.4M (US$2.56M) in WA.129 It was clear that conviction-based confiscation regimes were recovering only a minor portion of the billions derived or acquired through criminal activities. This situation sparked debate about the efficiency of the confiscation regime and the advantages of non-conviction–based confiscation regimes. Similarly, the Australian Law Reform Commission, in its report “Confiscation that Counts; A Review of the Proceeds of Crime Act 1987130 (1999), found that conviction-based confiscation systems were not producing the intended results, that very little was being confiscated, and more importantly, that the existing regime was having little or no impact on deterring and fighting crime. The report recommended enacting a non-conviction–based regime. As a result of these debates, in 2000, the Criminal Property Confiscation Act was enacted in WA, the first state within the federation to introduce a non-conviction–based in personam forfeiture regime, providing for two forfeiture streams: UWOs and the criminal benefits declaration (CBD) (including crime-used and crime-derived property). NT followed suit and adopted a similar statute mirroring the provisions of the WA in 2003.

In 2002 the Commonwealth responded to the criticism of conviction-based regimes and enacted a non-conviction–based regime with the Proceeds of Crime (PoCA) 2002. This law was also influenced by international trends that marked a new era in fighting transnational and global crime by pursuing the proceeds of criminal activities. Specific international initiatives included the UN Convention against

126 Cited by David Lusty in “Civil Forfeiture of Crime in Australia, ”Journal of Money Laundering Control, 2002, vol. 5, p. 348 127Ibid. at 2. 128Includes the Australian Crime Commission Report; Confiscation that counts, and Ben Clarke, “Confiscation of ‘unexplained wealth’; Western Australia’s response to organized crime gangs,”Afr. J. Crim. Just. 15, 2002, p. 61–87 129 David Lusty, “Civil Forfeiture of Proceeds of Crime in Australia,” J. of Money Laundering, vol. 5, p. 345–350 130Australian Law Reform Commission, Confiscation that Counts; A Review of the Proceeds of Crime Act 1987, 1996, available at:http://www.alrc.gov.au/sites/default/files/pdfs/publications/alrc87.pdf.



Transnational Organized Crime (2000) which is referred to also as Palermo Convention, and the Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988) also referred to as the Vienna Convention, and the 1990 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime. All the above-referenced conventions contained specific provisions that targeted the proceeds131 and instrumentalities132 of crime.

Although the Commonwealth entertained the possibility of introducing UWOs when the PoCA of 2002 was drafted and enacted, the regime was regarded as a step too far and a decision was made to not include UWOs in the bill. However, the PoCA is still a comprehensive statute providing for both conviction and non-conviction–based asset confiscation.133 The forfeiture provisions provide for both in rem and in personam forfeiture of property considered to have derived from criminal activities. Both schemes are non-conviction based, meaning that there is no requirement for a predicate offense to impose forfeiture of property. The in rem forfeiture is a proceeding instituted against the property; the in personam proceeding is instituted against the person if it is established that he or she owns property derived from a criminal offense. In personam forfeiture proceedings are applied in cases when there is insufficient evidence to convict a person for commission of an offense however, there is sufficient evidence to show, on balance of probabilities, that the person has committed an offense and has acquired benefits from it134. In both proceedings, the burden is on the property owner to show that the property was acquired through legitimate means to avoid forfeiture. The Act confers broad investigative powers on the state and on law enforcement to identify and trace the proceeds of crime, including examination orders (a court order summoning any person for an obligatory examination), notices to financial institutions, and production and monitoring orders. Proceedings under the PoCA are conducted as a civil hearing under the civil standard of proof—balance of probabilities—and, after the government establishes that the property has been acquired through commission of an unlawful activity, the burden of proof is shifted to the respondent to show that the property subject to any of the proceedings under the Act is lawfully acquired. The law also included a clause to assess the impact of the Act soon after its enactment and the progress made in achieving its objectives.

As a result, the Commonwealth commissioned an independent party to review the Act in 2006, four years after its enactment. The objective of the review was to assess the impact of the Act, identify factors that limited the achievement of the objectives of the Act, and make recommendations to improve the operations of the Act. The report, commonly known as the Sherman report,135 found that, in general, the PoCA of 2002 was having a greater impact than its predecessor, the PoCA of 1987, because significantly more assets were being seized and forfeited. On the other hand, it found that it was not meeting its objectives of deterring and preventing crime, although the report noted that measuring the impact on crime deterrence was subjective. It is important to note, however, that while confiscated assets increased in 2002, the amounts seized and forfeited under the non-conviction schemes were lower. As noted in the

131 See PoCA of 2002, s 329(1), defining proceeds of an offense to be: (a) property hole derived or realized, whether directly or indirectly from the commission of the offense; or(b) pertly derived of realized, whether directly or indirectly from the commission of the offense. 132 See PoCA of 2002, s. 329(2), defining an instrument of an offense to be; (a) the property used in, or in connection with, the commission of an offense; or (b) the property is intended to be used in, or in connection with, the commission of an offense. 133Confiscation schemes under the Act provide for: restraining orders that prohibit the disposal or dealing with property; forfeiture orders that forfeit the property to the Commonwealth; pecuniary penalty orders that require a payment of a certain amount; and literary proceeds orders that also require payment of amounts based on the literary proceeds of crime. 134 See PoCA, s.47(1)(c) and (2), stating that a “court must make a forfeiture order …. If the court is satisfied that a person whose conduct or suspected conduct formed the basis of the restraining order engaged in conduct constituting… serious offense” and under (2) further defining that” a finding of the court……need not be based on a finding as to the commission of a particular offense and can be based on the finding that some serious offense or other was committed”. 135Tom Sherman, Report on the Independent Review of the Operation of the Proceeds of Crime Act (2002), July 2006, available at: http://www.ag.gov.au/www/agd/agd.nsf/Page/Publications_ReportontheIndependentReviewoftheOperationofthePrceedsofCrimeAct2002(Cth).



CDPP Annual Report 2003136 the PoCA of 2002 came into operation on 1 January 2003 and it took CDPP substantial time to recruit and train additional staff to support the implementation of forfeiture schemes (See Table below illustrating the slow uptake in recovered assets). Furthermore, although Sherman described the operation of UWOs in WA and NT, he did not make recommendations to introduce them at the federal level. He stated that “Unexplained wealth orders are no doubt effective, the question is, are they appropriate considering the current tension between the rights of the individual and the interests of the community.”137 He added that it would be inappropriate to recommend their introduction at that time, but that the issue should be kept under review. In 2008, however, the Parliamentary Joint Committee of the Australian Crime Commission (PJC-ACC) initiated an inquiry into legislative strategies to combat organized and serious crime. Based on the results of the inquiry and the lengthy debates on the effectiveness of UWOs and other strategies to combat crime, the Commonwealth amended138 PoCA in 2010, introducing, among other additions, UWOs. Soon after, in December 2010, NSW moved ahead and introduced UWOs. Shortly before this, Queensland had adopted the Criminal Proceeds Confiscation Act and Other Acts Amendment in 2009 containing provisions similar to UWO. Although the statute does not have specific unexplained wealth provisions, its provisions are very similar. South Australia also introduced an unexplained wealth bill in 2009, which passed the Parliament, but it is not clear when it will go into effect.

Table 2: Criminal Assets Recoveries under the PoCA of 2002

POCA 2002 ($AUD)

Conviction PPO Civil PPO

Conviction FO's Civil FO's Other TOTALS

1 Jul 02 - 30 Jun 03 $0 $87,962 $59,263 $17,000 $0 $164,225

1 Jul 03 - 30 Jun 04 $0 $185,488 $758,634 $2,296,473 $220,845 $3,461,440

1 Jul 04 - 30 Jun 05 $599,431 $634,678 $3,040,891 $1,316,153 $953,308 $6,544,461

1 Jul 05 – 30 Jun 06 $1,137,846 $6,924,168 $4,971,537 $1,435,078 $25,918 $14,494,547

TOTAL $24,664,673

Source; Sherman report, April 2006

136 See CDPP Annual Reports 2003, at; www.cdpp.gov.au/Publications/AnnualReports/CDPP-Annual Report-2002-2003.pdf 137 Sherman report, 2006 138 See Crimes Legislation Amendment (Serious and Organised Crime) Act 2010 (Cth)


Country Focus –Australia/Western Australia 71

3.2.1.2 Western Australia (WA)

The History of UWOs in Western Australia

After ten years of implementation of conviction-based confiscation legislation, WA moved ahead and enacted non-conviction–based legislation in 2000, and with it, unexplained wealth provisions. It was the first jurisdiction in Australia to do so. Under the unexplained wealth forfeiture stream the courts are required to grant a UWO if it is more likely than not that the property is of unlawful origin. The law contains a statutory presumption that the respondent’s wealth has not been lawfully acquired unless the respondent is able to establish the contrary. The burden of proof shifts to the property owner to produce sufficient evidence to satisfy the court of the lawful origin of his property to avoid forfeiture. The Director of Public Prosecutions (DPP) need only satisfy the court, on a balance of probabilities, that it is more likely than not that the property constitutes unexplained wealth and that a person owns or controls property that is beyond his or her reasonable means of living. Provisions of the Criminal Property Confiscation Act (2000)139 are considered far-reaching compared with other forfeiture regimes in force in Australia and elsewhere. Critics claim they encroach on the fundamental civil rights of the respondents while proponents others argue that they are a reasonable tool to use against criminals who are otherwise untouchable. The law has been heavily criticized by the defense bar on the grounds that it contravenes the principles of common law and infringes on basic human rights. However, despite the criticism the law received when introduced, its practical application has caused little public dissent. On the contrary, the WA DPP was criticized by the media inquiring as to why these laws are not being applied more frequently.

The unexplained wealth provisions in WA were introduced before the local elections of 2000 as part of the WA government’s strategy to enact a tough-on-crime campaign to fight and deter serious and organized crime with a particular emphasis on drug trafficking. Introduction of the bill was propelled by an inquiry initiated by the Legislative Assembly of the Parliament of WA in 1997 in response to increased drug trafficking and an increased number of drug-caused or drug-related deaths in WA and other Australian states and territories. The Parliament established a Select Committee into the Misuse of Drug Act 1981 to examine mechanisms to prevent and amend drug problems including effective legal sanctioning of drug dealers. . In its report “Taking the Profit out of Drug Trafficking”,140 the committee found that the conviction-based confiscation regime was not producing the intended results and was not having an impact on reducing and preventing crime. Consequently, the committee recommended urgent introduction of a non-conviction–based forfeiture regime. This included a rebuttable presumption that all property owned or controlled by a person reasonably suspected on the balance of probabilities by the state of having been derived by trafficking, be deemed to have been obtained from the proceeds of drug dealing. Although the committee’s recommendations initially were intended solely for use against drug traffickers, lawmakers expanded its application to cover property or wealth derived from any illegal activity. The priorities of the WA government shifted from the regular notion of reactive prosecution to focusing on developing an effective legislative framework to combat, deter, and prevent crime and within that drug trafficking. Coincidentally, the Australian Law Commission advocated a similar strategy in its 1999 report, Confiscation That Counts, stating that confiscation schemes should aim not only to punish wrongdoings but also to prevent unjust enrichment of individuals through illicit activities.

The WA Provisions of the Criminal Property Confiscation Act (CPCA) of 2000 was a result of extensive research on national and international confiscation and forfeiture legislation conducted by the federal WA

139Criminal Property Confiscation Act 2000, as of 18 Oct. 2010. 140Select Committee into the Misuse of Drugs Act 1981: “Taking the Profit out of Drug Trafficking: An Agenda for Legal and Administrative Reforms in Western Australia to Protect the Community from Illicit Drugs,” Interim Report November 1997, available at: http://parliament.wa.gov.au/Parliament/commit.nsf/(Report+Lookup+by+Com+ID)/357E57A3B1C156B648257831003E9513/$file/InterimCover.pdf.



Office of Attorney General in seeking to develop an effective law that would enable the state to deprive criminals of their illegal gains, without a prior conviction, and reversing the burden of proof onto them to show the legality of their property. Key model laws that inspired the development of UWOs include the NSW Criminal Asset Recovery Act (CARA) of 1990, which provides for the reversal of the burden of proof onto the respondent and confers broad investigative powers to law enforcement agencies. The U.S. RICO141 Act inspired the authors to move toward enactment of a law that would target the proceeds of crime without a need to show or establish a nexus between the property and an offense, which is considered the largest impediment to tackling the principals of criminal organizations who organize and coordinate criminal activities but keep themselves at a safe distance from those activities. However, provisions on unexplained wealth of WA represented a new and innovative approach to attacking property that is derived from unlawful activities. The unexplained wealth law was specifically enacted by the WA parliament to target individuals who live beyond their legitimate means of support. It contain a statutory presumption in favor of forfeiture, deeming all or parts of property to have been derived from unlawful activities, and reversing the burden of proof onto the respondent to justify the source of his or her property. Further, the burden of proof on the state was eased and the prosecution does not need to show a connection between an offense and the property; it is sufficient to show that the person owns or possesses property that is beyond his or her reasonable means of living. This made it substantially easier for the WA prosecutors to forfeit property that is suspected of being derived from or used in criminal activities.

The bill received broad support in the Parliament, with only minor dissent from a few opposition members. Those opposing the law expressed reservation on the grounds that it violated the principles of common law–presumption of innocence - by reversing the burden of proof onto the property owner to establish that the property was acquired through lawful means. The bill also was criticized for its retrospective effect when applied against offenses and property acquired before the Act came into effect on the grounds that it created uncertainty for citizens, as they may be subject to a court proceeding for acts that were not against the law at the time they were committed. Although the first argument carries with it some weight because the burden of proof reverses onto the respondent during the proceeding, the second argument does not have value because the statute of WA does not require establishing a connection between any offense and the property subject to UWOs. The respondent is not charged or asked about commission of an offense.

Additional criticism came from the Law Society of WA on the grounds that the Act failed to provide sufficient protections for innocent parties and that it did not grant the court discretionary power in making a forfeiture order. The letter submitted by the Law Society to the Parliament stated “We are talking about the nature of mandatory confiscation under this legislation…application is made…the court is not given the usual discretion to decide whether to confiscate. As soon as the conditions are met, the property is confiscated and that is it; there is no discretion or jurisdiction left to the court to do otherwise”.142 Despite the dissent, the WA Criminal Property Confiscation Act (CPCA) was enacted in the proposed form with only minor changes that did not alter the substance of the law.

Criminal Property Confiscation Act (CPCA)

The main objective of the CPCA, in which WA’s UWO law and two other forfeiture mechanisms are found, as stated in its preamble, is to:

…provide for the confiscation in certain circumstances of property acquired as a result of criminal activity and property used for criminal activity, to provide for the reciprocal enforcement of certain Australian legislation relating to the confiscation of profits of crime and the confiscation of other property, and for connected purposes.

141 Racketeer Influenced And Corrupt Organizations (RICO) 142Introduction and First Reading, 29 June 2000, Criminal Property Confiscation Bill 2000.



The key features distinguishing confiscation regimes provided by the Act from the earlier regime are as follows: (i) it is non-conviction based and there is no requirement on the DPP to show that an offense was committed; (ii) the burden shifts to the respondent to produce evidence to establish lawfulness of property subject to an unexplained wealth application; (iii) it provides for forfeiture of all or parts of the property belonging to the respondents, irrespective if the property was acquired before or after the commencement of the Act; (iv) it provides for automatic confiscation of property within 28 days if the respondent does not object the seizure and forfeiture; and (v) the statute does not grant the court the discretion to refuse making of a forfeiture order. These points illustrate the legislature’s intent to draft a far-reaching law that enables the state to seize property merely on the suspicion on reasonable grounds of an authorized officer or prosecutor that a person possesses unexplained wealth or that a person may have been engaged in criminal activities. However, as will be detailed later, the Australian High Court has, through the few cases that have come before it, limited the effect of the Act.

In addition to the UWO, the CPCA provides for two more forfeiture streams under a CBD: crime-used property and crime-derived property, which can be either conviction or non-conviction based. In addition, the CPCA allows the state to forfeit “substitute property” in cases where the property used in the crime cannot be located. The crime-used property provision targets property that is used in commission of an offense, an instrumentality of a crime, while the crime-derived CBD deals with the profits and benefits directly or indirectly derived or acquired as a result of the commission of a criminal offense. As highlighted above, the UWO differs from the CBD in that the former does not contain a requirement to establish a nexus between an offense and the property, whereas under the CBD scheme, the property owner must either have been convicted of an offense, or the DPP has to show on balance of probabilities that the respondent committed an offense and the property derived is directly or indirectly as a result of the respondent’s involvement in that offense. Another conviction-based forfeiture feature under the CPCA is that it can be applied where there has been the commission of a “confiscable offense”143 which is defined as any offense that is punishable by two years of imprisonment. This is a very low threshold for application of forfeiture and confiscation schemes, especially because there are very few offenses in Australian legislation for which punishment is less than two years of imprisonment. The threshold set in the federal legislation for involving forfeiture proceedings against a person is three years. From this, it can be concluded that the primary objective of the legislation is to deter crime by taking away the profit and imposing radical measures as a deterrent to engagement in criminal activities.

It is also important to highlight that under the CPCA the conviction-based confiscation of property belonging to declared drug traffickers is considered one of the most radical confiscation schemes.

On declaration of a person as a drug trafficker144, the state also automatically confiscates all of the property owned or effectively controlled or given away at any time by the defendant, whether or not it is was acquired through lawful or unlawful means. This is one of the most-used confiscation schemes145 by the DPP in WA whereby a large proportion of confiscated property results from conviction and subsequent declaration of a person as a drug dealer. Use of this legal provision is far simpler for the government than use of UWOs or the two CBD tools.

143See CPCA 2000, Part 12, S142. 144Declared Drug trafficker means a person who is declared to be a drug trafficker under Section 32A of the Misuse of Drugs Act 1981, if he or she was charged and convicted with a serious drug offense and the offense that was committed, or it is more likely than not to have been committed after the commencement of this Act. Under the Misuse of Drug Act, a person is declared a drug trafficker, if he or she has been convicted of one drug-trafficking offense involving over 28 grams of heroin, or similarly prescribed quantities of other drugs, or three trafficking offenses involving any lesser quantities of any of the prescribed drugs. 145Se CDPP Annual Report 2009-2010, “A significant proportion of confiscated property arises from the conviction of an accused person and the subsequent declaration that the person is a drug trafficker”.



Proceedings under UWOs (Freezing Orders)

The proceedings under UWOs, pursuant to Section 11 of the CPCA, may commence either with an application for a freezing order or an application for unexplained wealth made in conjunction with an application for a freezing order. These can be made either in the proceedings for the hearing of an objection or at any other time. The DPP makes the final determination, based on the facts of the case, whether or not to initiate a proceeding with a freezing or a UWO. If there is an immediate risk that the property will be dissipated or lost (e.g., car or cash in a bank account), the proceeding will commence with a freezing order; in all other cases, the proceeding will commence with an application for UWO. The DPP receives and evaluates information from law enforcement and determines the best action for each case. The figure below describes the flow of the UWO proceeding in WA.

C

C

Comparative Analy

Country Focus –Au

ysis of Unexplained

ustralia/Western Au

d Wealth Orders

ustralia 75

Comparative Analysis of Unexplained Wealth Orders


Most of the cases are referred to the DPP by the WA state police and, to a lesser extent, by the Australian Crime Commission (ACC). However, there is no restriction as to whom might refer cases to the DPP. Cases have also been referred from the Australian Securities and Investment Commission and other agencies. Law enforcement bodies refer cases based on information they obtain when conducting criminal investigations. Police are responsible for carrying out investigations, collecting evidence, and preparing affidavits stating reasonable grounds on which they base their suspicion that the person possesses or controls unexplained wealth. Examples of such documents include, depending on the case, forensic accounting analysis, bank statements, property tracking documents, tax records, and any other document that can be obtained and would verify the origin of respondent’s property.146 After the police gather sufficient satisfactory evidence to show that a person possesses or controls unexplained wealth, the case is referred to the DPP, which then reviews the case and determines the best course of action. The police and the DPP may continue to work on the investigation, gathering additional evidence to strengthen the case before making an application to a court.

The examination order imparts to the DPP the power to require a respondent, or any other person who has knowledge or information related to the property subject to an order, to appear for examination.147 This power is somewhat similar to, but broader in scope, than grand juries in the U.S. Under the statute, anyone summoned for examination is required to answer questions and is prohibited from disclosing to anyone that an examination was conducted or that he or she was the subject of an examination order. If the person refuses to answer questions during the examination or provides false information he or she may be held in contempt of court and/or charged with a felony. The examination order is a powerful tool available to law enforcement to further investigations and to gather sufficient evidence to satisfy the court that the person owns or effectively controls property that is considered unexplained wealth.

The state also can use examination orders when applying for a crime-derived or crime-used declaration, or for confiscation of a declared drug trafficker’s property. However, the statute limits the use of information obtained during an examination process to only civil forfeiture or confiscation proceedings. It cannot be used in an on-going or subsequent criminal proceeding. Therefore, no criminal charges can be pressed against an individual based on the information obtained during examination. Legislators understand the power of examination orders and in response have imposed additional limitations on the examination powers of the state by authorizing the court to define the scope of the examination order. The scope of the questions is limited strictly to the property, its nature, and its location, subject to a UWO or any other civil forfeiture order and no other questions can be asked.

It is important to note that the ACC also has been granted similar powers; however, the examination powers of the ACC are broader and more far-reaching, with fewer limitations. The ACC is empowered to summon anyone for an examination, and relatively quickly, if required even within a workday. The scope of the examination may cover any subject that is of interest to the ACC. Concurrently, use of the information obtained is limited only to civil forfeiture proceedings, with a caveat that derivative information can be used to initiate criminal proceedings. In other words, if an examinee admits that he or he has committed a murder and discloses the location of the murder weapon, the ACC cannot disclose the person’s admission but it can point the police to the location of the murder weapon. Examination orders can be an important tool for gathering evidence under unexplained wealth provisions but they are not widely used under the CPCA in WA.

Further, the WA legislators incorporated provisions in the statute to ensure the protection of innocent owners and the adverse impact that an application for a UWO can have on them. These provisions empower the court to determine if a hearing will be held in a closed court or permit only a specific class

146For example, police have obtained records from casinos or horse racing to show that a person has not acquired his or her funds through gambling or horse racing. 147 CPCA 2002 – Division 2 – Examination



of persons to be present during the proceedings. Similarly, the court also may prohibit publication of the report of the proceeding or of any information related to the proceeding.

The DPP can, and in most cases will, apply ex parte for a freezing order to prevent property from being dissipated. Freezing the property that is suspected of being subject to a UWO is provided for under the confiscable property provisions of the CPCA (Section 43). Upon application by the DPP, the court may make a freezing order prohibiting anyone from disposing of the property if the court is satisfied that either (i) an examination, monitoring, or suspension order has or will be made against a person in relation to the property, or (ii) an application for an unexplained wealth declaration has been or will be made within 21 days after the freezing order is made. Freezing orders obtained on the grounds that an examination order has been made usually are done to enable the DPP to determine whether or not an unexplained wealth declaration can be served.

Pursuant to the statute, when a freezing order is made ex parte, any person with an interest in the property must be notified of the order as soon as practicable. In addition to notifying the person that his or her property is subject to a freezing order, it must advise the person that if he or she does not file an objection to the confiscation within 28 days from the day the notice is received the property will be automatically confiscated. However, the courts have determined that the automatic confiscation is applicable only for crime-used and crime-derived streams and is not applicable for the unexplained wealth forfeiture stream. To identify any person who has an interest in property the Act requires that any person receiving a notification of a freezing order make a statutory declaration at the court and identify any other person that may have an interest in the property. The courts recognize that the statutory declaration is a mechanism to identify all persons who may be affected by the order. If the person fails to make a statutory declaration, he or she may be fined up to AUD$5,000.

The scope of a freezing order varies from case to case. It can cover all property owned or effectively controlled by the respondent at the time when the order is made as well as the property acquired after the order is made. Frozen property will be in the care of the DPP, Public Trustee, or the Commissioner of Police. Although the general idea is to retain the property pending judicial determination, the court can order that the property be sold or destroyed in certain circumstances. The order freezing real property becomes valid once it is registered in the Registrar of Titles of the State of Western Australia; for other tangible properties, the order is valid from the moment it is made by the court. Any person dealing with the property in any way while it is frozen commits a serious offense, and may be fined up to AUD$100,000 or the value of the property or subject to imprisonment for five years, or both.

A freezing order remains in effect as long as the grounds on which it was made are valid. If a freezing order is made on the grounds that an application for an unexplained wealth declaration will be made within 21 days, the order will stop being in effect if an application is not made or if the court set the freezing order aside.

Proceedings Under UWOs (Forfeiture Orders)

Section 11 of the CPCA provides that on application by the DPP to a court for an unexplained wealth declaration against a person, the court must make an order if it is more likely than not that the person owns or effectively controls unexplained wealth. The statute does not grant the court discretionary power to determine whether to make an order once it is shown on the balance of probability that a person owns unexplained wealth. The statute states that a person has unexplained wealth if the value of the person’s wealth is greater than the value of the person’s lawfully acquired wealth. Property bought or paid for with unlawful consideration is unlawful, even if the property itself was obtained legally.

Under the statute, the DPP bears the initial burden of proof and must establish on the civil standard of proof that it is more likely than not that the respondent owns unexplained wealth. It is not necessary to show that the property was derived or acquired as a result of a specific offense or to show that the respondent has been involved in or has committed an offense. This provision was upheld by the District



Court of Western Australia in a recent case,148 where the court held that “mere unexplained wealth may trigger confiscation in certain circumstances and that it is no longer a requirement to show that an offense was committed.” This lack of a requirement of a predicate offense eased the burden of proof on the prosecution to institute cases under unexplained wealth provisions, merely on the grounds that there is a reasonable suspicion that a person owns unexplained wealth However, overly prescriptive provisions on assessment and valuation of unexplained wealth have raised the threshold of the burden of proof the prosecution has to meet to institute a successful UWO case. The prosecution is required to produce evidence detailing all the property that the respondent owns, or effectively controls including property that has been consumed or disposed of and its origin. Only then does the burden shift to the respondent to show lawful origin of the whole or parts of the property the prosecution suspect constitutes unexplained wealth.

CPCA Section 13 determines that “the value of the respondent’s unexplained wealth is the difference between the total value of the respondent’s wealth and the value of the respondent’s lawfully acquired wealth”. The statute specifies, in Section 144(2), that the value of a person’s wealth is the amount equal to the sum of the values of all items of property, and all the services, advantages, and benefits that together constitute the person’s wealth, including property the person owns or effectively controls149 when an application is made, property that is acquired after an application is made, or property that is consumed or given away at any time. This implies that for the court to determine if the respondent owns or controls unexplained wealth it will need a full inventory of his/ her wealth, including the wealth consumed. The DPP considers these statutory requirements cumbersome, demanding, and time consuming because they impose a heavy burden to identify, trace, value, and determine the origin of each item of the property that constitutes the respondent’s wealth. Thus, it is considered that the burden of proof on the prosecution in reality has a higher threshold than inferred or contemplated by the legislature, whereby it was considered that it would be sufficient to merely show that a person owns more than he or she has lawfully acquired before the burden shifts to the respondent to show the lawful origin of the property. Thus, the prosecution must conduct a thorough investigation, employ highly skilled forensic accountants, and have access to considerable resources to gather the evidence necessary to establish in front of a court that the value of a person’s wealth is greater than their lawfully acquired wealth.

After the prosecution establishes that it is more likely than not that the person owns or effectively controls property that is unexplained wealth, the court will presume, pursuant to Subsection 12(2), that “any property, service, advantage or benefit that is a constituent of the respondent’s wealth is presumed not to have been lawfully acquired unless the respondent establishes the contrary.” The statute has a presumption in favor of forfeiture and the court will presume that the respondent owns or possesses unexplained wealth unless the respondent rebuts the claims of the prosecution. If the respondent is unable to prove the legality of the property he or she bears the risk of losing it all.

In practice, however, the threshold the respondent is expected to meet is much lower when compared with the threshold of the prosecution. The civil standard of proof applicable in civil forfeiture cases is the one applied in Briginshaw,150 “reasonable satisfaction,” which is a higher standard of proof than that implied by the civil standard of proof on the balance of probabilities. The High Court of Australia stated that for the court to be reasonably satisfied on an issue it must be convinced, depending on the gravity of the issue, “clearly,” unequivocally, strictly, or with certainty”. Courts have embraced the argument that it should be easier for the state with its enormous apparatus and resources to bear a higher standard of proof compared to the individual who has access to limited resources to counter the allegations made by the

148Unreported case of the District Court of WA (2008). 149The definition of effective control is provided for under the Act (Section 156), which states that a person has effective control of property if he or she does not have the legal estate in the property but the property is directly or indirectly subject to the control of the person, or is held for his or her benefit. 150Briginshaw v. Briginshaw, (1938) 60 CLR 336.



state. In practice, this has set a higher threshold of proof for the state and lowered the standard of proof for the respondent. In reality the respondent can discharge the burden of proof if he or she gives a statement under oath simply declaring that the property is lawful and it was not acquired through unlawful means. Courts have considered it sufficient if the respondent claims that the property or money was inherited or a gift from a relative overseas, or were acquired through gambling or horse racing. This has been made possible, in particular, because the Australian revenue code does not require gifts, inheritance, or funds acquired through gambling to be reported for tax purposes. Therefore, the statements cannot be verified with the tax records and the statement must be accepted as accurate unless the prosecution is able to establish the source of the funds.

In determining whether or not the respondent owns or possesses unexplained wealth the court will, among other issues, take into account the respondent’s income and expenditures at any or at all times (Section 12(4)). There is no limit as to how far back in time the court can go in evaluating the lawfulness of a respondent’s property. However, as a matter of practicality, for accounting purposes law enforcement officials and the prosecution have determined that a cutoff date is necessary to facilitate financial analysis of a person’s property.

The statute provides, and the courts have upheld, that hearsay evidence is admissible in court, providing that an affidavit of an authorized officer stating his or her belief that the person owns unexplained wealth is sufficient evidence to satisfy the court that an order should be made. This was confirmed by the Supreme Court of Western Australia in Director of Public Prosecution for Western Australia v. Hafner.151 The statute also provides that the court may hear evidence or the opinion of people experienced in the investigation of illegal activities involving prohibited plants or drugs, such as officers of the Australian Federal Police, police officer of WA, customs officers, and DPP, to help determine the value of the property. Transcripts of other proceedings also can be used as evidence against a person in a proceeding under the Act.

After the UWO is issued, pursuant to Section 14 of the Act, the respondent whose property is subject to the order is required to pay to the state an amount equal to the amount specified in the declaration as the assessed value of the unexplained wealth . The payable amount is paid into the Confiscation Proceeds Account.152 If the person fails to pay the amount within one month the debt will be recovered from the frozen property unless the court has granted an extension.

Successfully obtaining a UWO is resource intensive because it requires specific sets of skills such as forensic accounting and investigators, to identify respondents’ wealth and determine which parts of the property cannot be justified as being unexplained wealth. The WA police recently have employed additional staff with financial qualification with the intent of increasing applications for unexplained wealth.

Proceedings under Criminal Benefits

As described in Section 3.2. (ii), in addition to UWO provisions, the Act contains two other forfeiture schemes: crime-used property and crime-derived property of a declared drug trafficker. Proceedings for crime-derived and crime-used property commence with seizure and a freezing order. A police officer is authorized to seize, retain, or guard property for 72 hours or longer if a freezing order is made after the property was seized. A justice of the peace may make a freezing order if he or she is satisfied that there are reasonable grounds to believe that the property is crime-used or crime-derived or if a person has been charged or will be charged for commission of an offense within 21 days or if the person can be declared a drug trafficker. The law requires that a freezing notice must be sent to the owner and any other third party who may have an interest in the property summarizing the effects of the notice and advising him or her that if an objection to confiscation of the property is not filed within the time prescribed by law the

151Director of Public Prosecution for Western Australia v. Hafner, [2004] WASC 32. 152 See CPCA of 2002, s. 130



property will be automatically confiscated within 28 days. Any person receiving a freezing order is obliged to give a statutory declaration to the police officer within seven days of receiving it stating the names of other persons who may have an interest in the property. A penalty is applicable for those who do not comply with the order.

Making a Declaration The DPP initiates criminal benefits proceedings by applying to a court for a criminal benefits declaration (CBD). The court must make a declaration if it is more likely than not that the respondent was involved in the commission of a confiscation offense153 and that he or she has derived direct or indirect benefits, services, advantages, or property as a result of his or her involvement in the commission of an offense. If the person was convicted of the confiscation offense the court presumes that the respondent has derived benefits from the property. However, the court may make a CBD even if the person has not been charged or convicted of an offense if there are grounds to believe that he or she has committed an offense. The court presumes that property, services, and advantages have derived from crime unless the respondent establishes otherwise.

The court will not make a CBD if one already has been made in relation to the property, if the property has been confiscated, or is the subject of a UWO. When the court makes a CBD the respondent is required to pay to the state an amount equal to the assessed value specified in the CBD. The value of the property, services, advantages, and benefits is considered to be the value at the time it was acquired or on the day the application was made, whichever is greater.

Crime-derived property remains crime-derived even if it is disposed of, used to acquire other property, or otherwise dealt with. If crime-derived property is used to purchase lawful property, the lawful property becomes crime-derived because of the origin of the original property. The statute provides that property ceases to be crime-derived property when it is acquired by an innocent party, if the court orders its release, if forfeited money has been paid to the Public Trustee, or if the property is disposed of in accordance with the CBD.

Substitution of Crime-used property in Criminal Benefits

Substitution of crime-used property is another novelty introduced under the CPCA to ensure that when property used for the commission of crime is no longer available, then other property can be confiscated to satisfy the claim. Before a court makes a substitute of crime-used property order, the DPP is required to establish, on civil standard of proof, that it is more likely than not that the respondent has used the property in the commission of an offense. The court considers that the property is no longer available if the respondent does not own or have effective control over it, or if a freezing order has been made that was set aside in favor of the spouse or partner or a dependent.

For a court to declare property as a substitution of crime-used property, it does not need to base its finding on the commission of a specific confiscation offense, but only on whether or not a confiscation offense was committed, regardless of whether anyone was charged or convicted of the offense. A declaration may be made even if no one owns or effectively controls the identified property. The burden of proof is on the DPP, except in two situations. First, if the respondent has been convicted of the crime, the court will presume that the property was used for commission of an offense, and the respondent bears the burden to establish the contrary. Second, if the respondent is not convicted for commission of the offense, and it was established that the crime-used property was in the respondent’s possession at the time the offense was committed or soon thereafter, and that the property was used in commission of the offense, the respondent bears the burden of proof to establish the contrary.

Thus, it can be concluded that the respondent bears the burden of proof in the majority of the cases because the statute places the burden on the respondent, whether the person is convicted of an offense or not convicted of an offense but there are grounds to believe that some offense was committed.

153In the Act, confiscation offense means an offense against a law in force, anywhere in Australia, that is punishable by imprisonment of 2 years or more.



When the court makes a crime-used property substitution declaration, the respondent is required to pay to the state an amount equal to the amount specified in the declaration. The value of the property is assessed based on the value of the property at the time the relevant offense was committed or is likely to have been committed. A declaration also can be made against two or more respondents, in which case they are jointly liable to pay to the state the amount specified in the declaration.

Recovery and Release of Confiscable Property in Unexplained Wealth Orders and Criminal Benefits

Recovery of Confiscable Property When the court makes the declaration for unexplained wealth the respondent must pay the state the amount specified in the declaration within one month. The court may extend this period for an unrestricted period of time. However, if the respondent fails to meet his or her debt within the given time period the DPP can apply for a confiscable property declaration, asking the court to allow satisfaction of the debt from the frozen property owned or in effective control of the respondent.

Release of Confiscated Property After property has been confiscated the owner may apply for release of the confiscated property. The owner must make such an application within 28 days from the date the person became aware, or can reasonably expected to have become aware, that the property was confiscated. The person making the application for release must establish that he or she owned the property and that it is not controlled by the person benefiting from the offense and that the person was not aware or could have not been aware that the property was liable for confiscation.

Investigation and Search

Investigation and search - For the purpose of collecting relevant information the court may make examination, monitoring, and production orders. When making a decision whether or not to apply for a freezing order or a declaration order, the DPP or a police officer may conduct preliminary inquiries. During the preliminary inquiries, they may request information from a financial institution on financial transactions and other activities related to the respondent’s account. The financial institution must comply with the order. If it fails to do so, a significant penalty can be imposed.

Examination, Production, and Monitoring Orders As discussed in 3.2.1.2 (iii) the District Court may order a person to submit to an examination. The court also may make a production order, ordering a person to produce property tracking documents if the court suspects that the person has the documents in his or her possession. Anyone contravening the production order is considered to have committed an offense. A person is not excused from complying with an examination or production order under the pretext that the information given might incriminate him or her or that by complying with the order, he or she would breach an obligation. This feature was held to violate well-known principles of professional privilege, posing ethical and professional dilemmas for many professionals. It especially will affect defense lawyers of those suspected of committing organized crime offense or other criminal activities.

Information disclosed during examination is admissible evidence in a proceeding under the CPCA as well as in any other civil proceedings. However, any information obtained during the examination order cannot be used in a criminal proceeding against the person. The statute grants the authority to the District Court to make an examination order on an application by the DPP. However, the court determines the type and the nature of questions that can be asked by the DPP during an examination order. The questions are limited to the property subject to an order and any other property, income, or expenditure the respondent may own or effectively control. Examinations are conducted in camera and the respondent or the person to be examined may be represented by a legal representative. The examination powers granted to the DPP under the CPCA are narrower than the examination powers granted to the ACC under the Act establishing the ACC. The ACC not only has broader powers, but also can exercise them independently of a court and within a much shorter period of time. Further, under the Act, if the respondent fails to answer the questions he or she is not entitled to file an objection to the confiscation of property, or, if such an objection is filed, it has no effect. If the respondent fails to answer the questions, he or she may be fined



up to AUD$100,000 or an amount equal to the value of the property or may be subject to imprisonment for five years or both. Any other person failing to respond to an examination order or contravening such an order may be fined up to AUD$50,000 or be subject to maximum imprisonment of up to two years.

The DPP also may apply ex parte for monitoring and suspension orders, ordering a financial institution to monitor an account of a person suspected of having benefited or of being about to benefit from an offense. The financial institution is obliged to comply with the order and give information to the DPP or a police officer about all transactions carried out through an account held with the institution by that person. The monitoring order can be in force for up to three months. These provisions help law enforcement agencies establish the extent of a respondent’s wealth and its sources.

Secrecy Requirement One of the key features of the CPCA that is not provided for in the Commonwealth’s PoCA of 2002 is the secrecy requirement, whereby any person who is the subject of a preliminary inquiry, examination, monitoring, or production order should not disclose or share with anyone information about the examination, monitoring, or production order, the requirements of the order, or the information given in compliance with the order. One exception is for a corporate officer, enabling him or her to disclose restricted information to the DPP or police, an officer of the corporation, and a legal practitioner for the purposes of obtaining legal advice.

Detention, Search, and Warrant A Justice of Peace may issue a search warrant to a police officer for the search of premises if satisfied that there are reasonable grounds to suspect that there will be confiscable property or any property tracking documents at the premises within 72 hours. The search warrant may be executed at any time and will continue to be in force for 30 days. If the applicant has reasonable grounds to suspect that firearms may be used, he or she must state the grounds for that suspicion.

Management of Seized, Frozen, and Confiscated Property

The Commissioner of Police is responsible for managing seized property and the DPP is responsible for managing and controlling frozen and confiscated property until a decision is made whether to return it to the owner, to sell it, to destroy it, or to dispose of it. The DPP may appoint a Public Trustee, the Commissioner of Police, or the person who owns the property to manage the property while the freezing order is in effect. The person controlling the property while the freezing order is in effect may arrange for the property to be valued by a qualified evaluator and send a copy of the inventory to all persons who received a copy of the freezing order. The Public Trustee is entitled to receive any fees for performing its functions.

All funds forfeited or confiscated under the CPCA are transferred to the Confiscation Proceeds Account. On direction of the Attorney General funds from this account can be used to provide support services and other assistance to victims of crime, to support activities of the police against crime, and to cover the costs incurred from storing, seizing, or managing frozen or confiscated property. In 2009, the AG and DPP made a decision to allocate to the police approximately 15 percent of all funds derived as a result of confiscation or forfeiture. These funds have been used to hire new staff, provide training, and develop skills in areas critical for implementation of the CPCA. Additional resources have motivated the police to ramp up the efforts in identifying, tracing, and forfeiting proceeds acquired as a result of unlawful activities.


Country Focus –Australia/Commonwealth 83

3.2.1.3 Australia Commonwealth (Serious and Organized Crime Act 2010)

Background

The Commonwealth of Australia enacted the Proceeds of Crime Act in 2002. It is a comprehensive forfeiture and confiscation regime introducing non-conviction based forfeiture of proceeds and instrumentalities of crime. The Commonwealth PoCA is a complex and comprehensive legislation containing a range of conviction-based and non-conviction–based forfeiture schemes including literary proceeds, pecuniary penalties, and in rem forfeiture proceedings. The law was amended in 2010 to introduce UWOs with the Crimes Legislation Amendment (serious and Organized Crime) Act.

Proceeds of Crime Act 2002

As noted in the preamble of the PoCA, its principal objectives are to “deprive persons of the proceeds and instruments of the offenses including derived benefits, against the laws of Commonwealth or the governing Territories and to deprive persons of literary proceeds derived from commercial exploitation of their notoriety from having committed offenses”. In 2010, the following section was added, incorporating UWOs into the PoCA “to deprive persons of unexplained wealth amounts that the person cannot satisfy a court were not derived from certain offenses and to punish and deter persons from breaching laws of the Commonwealth or the non-governing territories and prevent reinvestment of proceeds”.154 Inclusion of UWOs in the PoCA permitted the courts to forfeit unlawfully acquired property across the country in all states and territories if the Commonwealth laws are violated. One of the deficiencies of the adoption of UWOs at the state level was that it created the undesired consequence of those engaged in illegal activities merely moving their activities to another state. Adoption of UWO laws by the Commonwealth is aimed to remedy that situation by ensuring that there are no weak points. However, one limitation remains: application of unexplained wealth laws is limited to confiscating property derived from offenses against a federal law or a state offense with a federal aspect.

As with the WA unexplained wealth law, a key feature of the Commonwealth UWOs is that it places the burden of proof on the person whose property is the subject of the order. He or she is required to appear before a court and show evidence to satisfy the court that the property was lawfully acquired. If the person fails to satisfy the court, the court will make an order asking the person to pay an amount of money equivalent to the unexplained wealth to the Commonwealth. All proceedings are civil in nature and the civil standard of proof—balance of probabilities—applies.

PoCA is a complex law providing an array of forfeiture and confiscation schemes for indictable offenses that range from non-serious to serious and terrorism offenses. It is interesting to note that the PoCA of 2002 contained provisions reversing the burden of proof to the property owner when an application for forfeiture had been made and in this regard the unexplained wealth orders do not represent an innovation or novelty in the Act, as the PoCA of 2002 already provided for the reversal of the burden of proof to the respondent. The intention of the Australian Federal Police, who took the lead in promoting the law at the federal level, was to enact legislation similar to that in existence in WA and NT without a requirement to establish a nexus between specific assets and criminal wrongdoing and to reverse the burden of proof to the respondent. However, their efforts were thwarted during the legislative drafting process. The Office of Attorney General incorporated provisions that required the government to show a nexus between the property and an offense. Including the requirement of showing a tight link with an offense significantly weakened the powers of the UWOs because mere ownership of unexplained wealth no longer is sufficient to apply the order. The state must establish, on balance of probabilities, that a person has committed an indictable offense, whether a foreign offense, a Commonwealth offense, or a state offense with a federal aspect. However an actual conviction is not required for a UWO.

154PoCA 2002 Section 5, Part 1-2 Objects.



Proceedings under Unexplained Wealth Orders

Freezing Orders Most of the proceedings under the Commonwealth PoCA commence with a freezing order or a restraining order to prevent dissipation and loss of the property. In most cases, the first phase in forfeiture and confiscation proceedings is an application for a freezing order.

Freezing orders are made on financial accounts if there are grounds to suspect that the account balance reflects proceeds or an instrument of an offense, and the magistrate is satisfied that unless the order is made the owner will not be deprived of all or parts of the proceeds or instrument of an offense. The proceeds do not have to be related to the commission of a specific offense. Authorized officers155 are empowered to apply for a freezing order by submitting an affidavit with detailed information suggesting that the balance in the account is the proceeds of an offense or an instrument of a serious offense. With the freezing order a magistrate can order a financial institution not to allow a withdrawal from an account. For urgent cases, freezing orders also can be issued by telephone, facsimile, or other electronic means if the delay would impede the effectiveness of the order. However, this order does not prohibit the financial institution from withdrawing funds from an account that is under a freezing order to meet its liabilities. The financial institution and the authorized officer enjoy immunity and cannot be sued for requesting or complying with a freezing order. The statute also contains provisions permitting the account holder to withdraw funds to meet his or his dependent’s reasonable living expenses, but not to cover legal costs to be incurred in connection with the proceedings under the Commonwealth PoCA. The law also provides for revocation of a freezing order.

Restraining and Forfeiture Orders Restraining orders can be made against property on application by the DPP on the grounds that the property may be the object of forfeiture or confiscation in relation to certain offenses. Property is forfeited to the Commonwealth if certain offenses have been committed, although conviction for an offense is not always a requirement to order forfeiture. Alternatively, penalty orders can be made, ordering payments to the Commonwealth of a specified amount of money.

Restraining, forfeiture, and pecuniary penalty orders are made by a competent court on application by the DPP.

Similar to WA unexplained wealth provisions, a proceeding for a UWO (see figure on next page) can commence with an application for a restraining order or an application for a preliminary UWO. However, differing from the WA and NT UWO laws, the Commonwealth PoCA has introduced another phase in the proceedings, the preliminary UWO, which requires a respondent to appear before a court to enable the court to determine whether or not to make a UWO. This phase is the trial of the case whereby the court hears all the evidence and submissions of the parties and determines whether or not the person owns or controls the property that is considered unexplained wealth. The final phase of the proceeding is when the court makes the order, requiring a person to pay an amount specified in the declaration to the state.

155 Authorized officers are certain members of the Australian Federal Police (AFP), Australian Commission for Law Enforcement (ACLE), and Australian Crime Commission (ACC).

C

C

Comparative Analy

Country Focus –Au

ysis of Unexplained

ustralia/Commonw

d wealth Orders

wealth 85



Restraining Orders Pursuant to Commonwealth PoCA Section 20A, the court may, on application by the DPP, issue a restraining order prohibiting anyone from disposing of or otherwise dealing with the property specified in the application. Differing from the WA PoCA, the unexplained wealth provisions under the Commonwealth PoCA require the DPP to notify, in writing, the property owner and any other third person with an interest in the property of its intent to make an application for a restraining order, unless the court permits the DPP to make an application without notifying the owners if there are reasonable grounds to believe that the property may be disposed of. The DPP may make an application for a restraining order supported by an affidavit of an authorized officer stating reasonable grounds on which he or she bases the suspicion that: (i) the person owns or effectively controls the property subject to the application, (ii) the person has committed an offense,156 or (iii) all or part of the person’s wealth was derived from an offense. While the property is under a restraining order, the court may order that some of the property be used to meet the owner’s reasonable legal expenses arising from application of the Commonwealth PoCA. However, before any payment is made, the court will direct a court assessor to certify that legal expenses have been properly incurred. In addition, the court may make an order allowing recovery of reasonable living and business costs of the respondent and his dependents from the restrained property. Finally, the court is granted discretion to refuse to make a restraining order if it is satisfied that it is not in the public interest to do so or if the Commonwealth refuses to make an undertaking with respect to the payment of damages or costs. If the court refuses to make a restraining order on the grounds that it is not in the interest of justice it may make an order regarding costs it considers appropriate, including costs on an indemnity basis.

restraining order related to unexplained wealth ceases to be in effect if one of the following occurs: (1) days pass from the day the order was made and an application for a UWO was not made; (2) the application is made, but the court refused to make the order; and (3) the time for an appeal has expired and the appeal has lapsed or was dismissed.

Issuance of Unexplained Wealth Order Pursuant to Section 179B, a court will, on application by the DPP, make a preliminary UWO ordering a person to appear before the court to enable the court to decide whether or not to make a UWO. The application by the DPP must be supported by an affidavit of an authorized officer stating reasonable grounds on which she bases his/her suspicion that the person’s total wealth exceeds the value of the person’s lawfully acquired wealth. It also must identify the person who is the owner of the property and show that the property is owned or in effective control of that person. Section 179G of the Commonwealth PoCA defines the respondent’s wealth as consisting of all of the property owned or controlled by the respondent at any time, before or after law came into effect, including the property that the person has disposed of or consumed at any time. The total wealth of a person is the sum of the value of all property that constitutes the person’s wealth. On DPP’s request, the court may make a preliminary UWO without notifying any person. In such a case, pursuant to Section 179N, the DPP is required to notify the property owner or any third party with an interest in property within seven days from the day the order is made.

Preliminary UWOs may be revoked, pursuant to Section 179C, on application by the property owner within 28 days from the day he or she was notified of the order. This period can be extended for up to three months by the court on application by the owner. The court will revoke the order only if it is satisfied that there are no reasonable grounds on which the order could be made or if it considers that it is not in the interest of justice or the public to do so.

If the court subsequently issues a UWO (Section 179E), it directs the respondent to pay a specified amount of money to the Commonwealth that is equal to the difference between the respondent’s total wealth and the value of lawfully acquired wealth. The court will make an order if a preliminary UWO was in place and if there are reasonable grounds to believe that all or part of the person’s wealth derives

156 An offense is the offense against a law of Commonwealth, a foreign indictable offense, or a state offense that has a federal aspect.



from commission of an indictable offense. The provision on predicate offense, requiring the state to show that respondent’s wealth is derived from a specific offense, is unique to the federal unexplained wealth laws. The burden of proof, however, is on the owner to show lawful source of the property. Section 179E(3) states: “In proceedings under this section, the burden of proving that a person’s wealth is not derived from one or more of the offenses …… lies on the person”.157 The court has the discretion to make an order unless it considers it is not in the interest of justice to do so. If the government fails to give undertaking of damages the court may refuse to make a preliminary UWO.

The court has the authority to vary UWOs on application by the DPP and to increase the unexplained wealth amount if facts or evidence become available after the UWO was already made, or if it was impossible to identify the property at the time the order was made.

If making a UWO will cause undue hardship to a person’s dependents, the court may order the Commonwealth to pay a sum of money to relieve the hardship, if the dependent is at least 18 years old. The court also may decide to cover legal expenses of the person who is the subject of a UWO arising from application of this Act. Legal expenses will be paid from the property declared unexplained wealth.

The Act contains a provision based on the operation of Part 20A (Unexplained Wealth Order) that is overseen by the Parliamentary Joint Committee on Law Enforcement (the Committee) and it may require the Australian Federal Police, Australian Crime Commission, the DPP, and any other federal agency receiving any material disclosed related to this part of the Act, to appear before it from time to time to give evidence.

Since the entry into force of the Act, the power to implement a UWO has rested with the DPP; however, with the Crimes Legislation Amendment Bill of 2011,158 there have been amendments to various Acts related to the enforcement of criminal law and proceeds of crime. Specifically, the Commonwealth PoCA provides for sharing of power between the DPP and the Commissioner of the Australian Federal Police (AFP) to perform functions and duties related to orders under the Commonwealth PoCA of 2002. This means that the AFP has the power to initiate any of the proceedings for forfeiture or confiscation of the proceeds of crime provided under the Commonwealth PoCA. This has subsequently been amended to include the Commissioner of the AFP, together with the DPP, as the “responsible authority” to initiate any proceedings under the Commonwealth PoCA and to appear before a court hearing an application for a proceeding. These provisions came into effect in January 2011 but the AFP has not used these powers.159

However, there is tension between the AFP and the DPP regarding the role each will play and the division of responsibilities. And this tension has increased in the context of the newly proposed initiative by AFP to establish a separate independent task force that will act as a responsible authority to initiate proceedings under the Commonwealth PoCA. The initiative is under way and may come into effect as early as fall 2011. The idea is to create an independent task force similar to the Irish model, composed of the AFP, ACC, the Revenue Services, and the Customs Office. The source of contention is the role of the DPP in the task force, or if it will play any role. Although the Commonwealth DPP expressed reservations toward unexplained wealth laws, it believes it has an important role to play in terms of acting as the filter between the police conducting the investigatory work and the courts reviewing and deciding the cases. However, others consider that the role of the DPP is yet to be defined and that it potentially may not have a role. At the time of writing the report, negotiations are underway between AFP, ACC and CDPP to determine the future roles as well as the inner workings and modalities of the practical operation of the proposed task force.

157 Re-enforcing the reversal of the burden of proof in unexplained wealth order proceedings, S.179E(5) reiterates that despite S.317 of the Act, that states that the burden of proof in any proceeding under PoCA is on the applicant (DPP or AFP), subsection 3 placing the burden on the respondent has effect. 158 Crimes Legislation Amendment (No. 2) 2001, the Parliament of the Commonwealth of Australia. 159No case has been initiated by the AFP as of June 2011 but Booz Allen learned that at least one case was being considered.



Proceedings under Convictions for Indictable Offenses160

Restraining Orders The proceedings for forfeiture of assets for an indictable offense161 commences with either a freezing or a restraining order prohibiting the person convicted or charged for an offense from disposing of or dealing with the property. A court is obliged to make a restraining order on application by the DPP supported by an affidavit of an authorized officer if the person has been convicted or charged with an indictable offense or if it is proposed that he or she be charged with an indictable offense. The affidavit must include the grounds on which the authorized officer bases his or her suspicion and if the suspect has not been convicted that he or she is suspected to have committed an offense. If the application is to restrain the property of a person, other than the suspect himself, an affidavit must state the officer’s suspicion that the property is under the effective control162 of the suspect and that it is proceeds from or an instrument of the offense.163 The competent court has the authority to refuse to make a restraining order if it is satisfied that it is not in the public interest to do so or if the Commonwealth refuses to give undertaking of damages to a court.

The court may make provisions to allow for certain expenses of the person whose property is subject to the restraining order to be met by the restrained property including reasonable living expenses of the owner or his or her dependents, reasonable business expenses, and a debt incurred in good faith. However, the Act does not permit the court to make an allowance for legal costs. Requirements for notifying the property owner of a restraining order are strict to the degree that a court will not hear an application unless it is satisfied that the respondent has been properly notified.

The PoCA provides opportunities for third parties to apply for revoking or an exclusion of property within 28 days. If the person was not notified of the restraining order he can apply at any time to exclude property from the restraining order. The restraining order will cease if one of the following events occurs: (a) charges are withdrawn, (b) the suspect is acquitted, or (c) the suspect’s conviction for the offense is quashed, unless there is a confiscation order in process or an application for confiscation has been made. The restraining order ceases to be in force if, within 28 days after the order was made, the suspect is neither convicted nor charged for commission of an offense and a forfeiture order has been made. Applications for restraining orders, revocation orders, and exclusion from restraints are interlocutory proceedings.

Forfeiture Orders164 While the restraining order can be made against the property if there is reasonable ground to suspect that the person has committed an offense, forfeiture orders will be made only after the person has been convicted of an indictable offense. A property will be forfeited to the Commonwealth by a competent court on application by the DPP if the court is satisfied that (1) a person has been convicted of one or more indictable offenses not more than six months earlier and (2) the property specified in the order is proceeds or an instrument of one or more offenses. The court also has the option of making a pecuniary order that requires the person to pay a specified amount to the Commonwealth which is derived 160 See federal PoCA of 2002 S.17 Restraining Orders – people convicted of or charged with indictable offenses 161Throughout the text of the Act, whenever referring to an indictable offense, it includes an indictable offense, an indictable foreign offense, and an indictable offense of the Commonwealth. Indictable offense as defined in the Chapter 6 “interpreting this Act” of PoCA” means an offense against a law of the Commonwealth or a non-governing Territory”. Indictable offense of the Commonwealth “means an offense against a law of a state or a self-governing Territory that may be dealt on indictment and the proceeds of which were dealt with in contravention of the law”, which may include import and export of goods into or from Australia, communication and transactions in the course of banking. Foreign indictable offense means a conduct that constitutes an offense against a law in a foreign country, or if it occurred in Australia, it would have constituted an offense against a law of Commonwealth, a state, or territory. See PoCA 337A. 162See PoCA 2002 (337). Property may be subject to the effective control of a person even if the person has legal interest, a right, power, or privilege in connection with the property, this includes property held in trust, and property disposed of within 6 years before or after application for a restraining or confiscation order. 163163Proceeds are defined in PoCA 2002, Section 329 (1), to include property wholly or partly derived, directly or indirectly, from the commission of offenses and property indirectly derived to include property sold or disposed163.An instrument of an offense is a property used in, or in connection with or is intended to be used in the commission of an offense. 164 See PoCA of 2002, s.48 – Convictions for indictable offenses



from the commission of the offense. In some cases (e.g., terrorism offenses and conviction-based forfeiture) where property is suspected to be an instrument of an offense, the court will presume that the property was used in, or in connection with, the offense, even if no evidence is submitted to show that the property was used for commission of an offense. For the court to make such an order it is sufficient to show that the property was in the possession of the person convicted of an indictable offense at the time of, or immediately after, the offense was committed. Presumption that the property is an instrument of an offense places the burden of proof on the person whose property is the subject of the forfeiture order to rebut the court’s presumption and demonstrate the lawful origin of his or her property to avoid forfeiture. This shows that Australia has accepted the reversal of the burden of proof in conviction-based and civil forfeiture cases prior to introducing the unexplained wealth orders shifting the burden onto the property owner or a third party.

When making the order, the court considers whether the order will cause hardship on a person other than the owner of the property, the gravity of the offense, and the intended use of the property. The court will make an order to forfeit property even if the person has absconded, if it is satisfied that the person has fled and that if tried, he or she would have been charged and convicted for commission of an offense.

If the DPP applies for a forfeiture order, it is required to notify in writing the person convicted for commission of an offense whose property is subject to that forfeiture order and any third party and others whom DPP believes may have an interest. Alternatively, before making the decision to issue the order, the court may order the DPP to give or publish notice of the application. Further, the forfeiture application may be amended, either at the request of the DPP or with its consent, to include additional property. The court will amend the application only if it is satisfied that the necessary evidence became available after the application was made and it was not reasonable to identify the property at the time when the application was made. If a forfeiture order will cause undue hardship on the person’s dependents and the court is satisfied that the person’s dependents had no knowledge of the person’s conduct and are at least 18 years old, it will order the Commonwealth to pay a specified amount to his or her dependents to relieve the hardship.

Persons claiming any interest in a property are allowed to appear before the court and present evidence at the hearing of the application. The court appoints an Official Trustee to deal with the property on the Commonwealth’s behalf, dispose it, and from any amount received, cover his or her charges and costs and credit the remainder of the money to the Confiscated Assets Account established by the Commonwealth PoCA of 2002. This provides that if someone else disposes of, or otherwise deals with the property knowing that a forfeiture order has been made in relation to that property, he will be charged with an offense, for which the penalty is five years of imprisonment.

The court also may make an exclusion or compensation order, on application by a person who claims to have an interest in the property, if it is satisfied that the property or the interest of third parties in the property are not proceeds or an instrument of one or more offenses. The person making the application is required to notify the DPP of an application enabling him or her to produce further evidence in relation to the property.

If a person’s conviction is quashed the forfeiture order also is quashed if, within 14 days, the DPP does not apply to the court to confirm the forfeiture order.

Civil Proceeding Forfeiture (In Rem Forfeiture)

Pursuant to Section 49 the property suspected of being the proceeds or an instrument of an indictable offense (e.g., terrorism, foreign, or offense of Commonwealth) can be restrained by a court. An application is submitted by the DPP stating reasonable grounds for its suspicion supported by an affidavit of an authorized officer. The court will make the order if it is satisfied that an authorized officer stated reasonable grounds to believe that an offense was committed. There is no requirement to establish a link between the proceeds and the commission of a specific offense. The identity of the property owner is not



relevant for making the order; however, the DPP is obligated to notify the owner and third parties with an interest in the property of the application who then can apply for an exclusion order. If such an application is not made the court will make a restraining order. The court has the discretion to refuse to make such an order if the two following conditions are met: (i) the offense is not a serious offense, and (ii) the court is satisfied that making such an order is not in the public interest.

At least six months after a restraining order has been in force, the DPP can apply to forfeit the property to the Commonwealth. The DPP must apply to a court to establish that the property is the proceeds and/or an instrument of one or more indictable offenses. The DPP does not need to prove commission of a specific offense. Findings can be based on the belief that some type of indictable offense was committed. On application for a forfeiture order the DPP is required to notify, in writing, persons with an interest in the property.

The court may refuse to make a forfeiture order if an application has been made to exclude the property from the restraining order or if it considers that doing so would not be in the public interest.

Proceedings related to people suspected of committing Serious Offense

Restraining Orders165 If a person is suspected of committing a serious offense166 the court must make a restraining order prohibiting a person from dealing or disposing of the property as long as the DPP applies for an order and is able to show that there are reasonable grounds to suspect that a person has committed a serious offense. The application for a restraining order is supported by an affidavit of an authorized officer in which he lays reasonable grounds on which he /she basis the suspicions that the respondent has committed a serious offense. Reasonable grounds do not need to be based that a particular serious offense was committed. Since this is a civil proceeding the officer needs to only show on balance of probability that the person has committed some serious offense.

Forfeiture Order (s. 47) On an application of the DPP, the court must make a forfeiture or a pecuniary order if the property was subject to a restraining order for at least six months and the court is satisfied that there are reasonable grounds to suspect that the persons has been engaged in serious offenses. For the court to be satisfied that a person has been engaged in serious offenses it does not need to be based on the finding that the person committed a particular serious offense but only that some serious offense or other was committed. The order can be made before the end of six month period if it is made with parties consent. Hearsay is admissible on the application of the restraining order but is not admissible on an application for a forfeiture order unless it includes one of the exemptions in the Evidence Act, which applies to civil proceedings in the jurisdiction in which the application is brought. Moreover, the court does not have the discretion not to make the order even in cases when there is no risk of property being disposed of or otherwise dealt with.

All rights and remedies available to third parties under the section above, in relation to making an application for an exclusion or compensation order, are available to third parties with an interest in the property. For a court to make an exclusion or compensation order a third party must demonstrate to the court that his or her interests in the property are not proceeds or an instrument of unlawful activities. This does not apply to an already-forfeited property. Application for an exclusion or compensation order will not be heard until the DPP has had sufficient time to conduct a thorough examination in relation to the applications.

It is important to note that the PoCA also contains a scheme that allows forfeiture of property following conviction of a person of a serious offense, which is different from forfeiture of property of a person

165 See PoCA of 2002, s.18 Restraining Orders 166Serious offense is an indictable offense for which punishment is imprisonment of 3 or more years, involving unlawful conduct related to narcotic substances, serious drug offenses, money laundering, people smuggling, offenses against the Financial Transaction Reports Act of 1988, and offenses against the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006.



whose conduct constitutes serious offense (non-conviction based). In these cases forfeiture is automatic and does not require institution of a separate proceeding.167 In addition, the court may make a pecuniary penalty order following conviction of a person of a serious offense, after six months, from the day the person was convicted.

Proceedings under Literary Proceeds Orders

Literary proceeds are defined as a benefit that a person derives from the commercial exploitation of the person’s notoriety resulting, directly or indirectly, from commission of an offense or the notoriety of another person involved in the commission of that offense. Commercial exploitation may include publishing any material in written or electronic form, use of media and visual images, words and sound, and live entertainment.

A restraining order can be made on a suspect’s property if the court is satisfied that there are reasonable grounds to suspect that the person has committed an indictable offense or a foreign indictable offense and that the suspect has derived literary proceeds. There is no requirement to prove commission of a specific offense for the court to be satisfied; it is sufficient to demonstrate that the person committed an offense. The court has the discretion to decide whether or not to make a literary proceeds order.

Courts authorized to deal with forfeiture and restraining orders include all courts that have jurisdiction to deal with criminal matters (e.g., the District Court or the County Court). The Supreme Court also has jurisdiction.

On application by the DPP, the court may make an order directing a person to pay an amount to the Commonwealth, if it is satisfied that the person has committed an indictable or foreign indictable offense, regardless of whether he or she has been convicted of the offense, and that the person has derived literary proceeds related to the offense. A literary proceeds order can even include future literary proceeds if the DPP applies and the court is satisfied that the person will continue to benefit in the future.

When making an application, the DPP is required to give a written notice of the application to the person subject to the literary proceeds order, including a copy of the application.

In deciding whether or not to make a literary proceeds order the court will consider the nature and purpose of the product or activity; whether it was in the public interest and/or has social, cultural, and educational value; and the seriousness of the offense and when the offense was committed. In ascertaining whether or not the person has derived literary proceeds and determining the value of the proceeds, the court will treat any property in a person’s effective control as well as any property transferred to him or her by another person, to be his or her property.

Before the literary proceeds order is enforced, the DPP will apply for a confirmation order to a court. The person whose property is subject to such an order may appear at the hearing and present additional evidence. A confirmed literary proceeds order made in relation to an offense is considered a civil debt owed by the person to the Commonwealth.

Investigation and Search

Investigation and Examination To obtain relevant information the court may make an order to examine the person whose property is restrained, his or her spouse, and any third party with an interest in the property. The examinee cannot refuse to answer questions on the basis of self-incrimination. An examinee’s lawyer may be present at the examination and may participate in conducting the examination. Facts and documents disclosed by the examinee cannot be used as evidence in any civil or criminal proceeding against the defendant, except in proceedings for giving false information, proceedings in an application under the Commonwealth PoCA, or ancillary proceedings.

167 See PoCA of 2002, Part 2-3 Forfeiture on Conviction of a Serious Offense



Production Orders A magistrate may make a production order requiring a person to produce or make available one or more property tracking documents to an authorized officer for inspection. The magistrate can make such an order only if he or she is satisfied that there is a reasonable suspicion that the person possesses or is in control of such documents. This excludes documents used in the ordinary business of financial institutions. The authorized officer can inspect, examine, take extracts from, or make copies of the documents. The person is not excluded from producing a document on the basis of self-incrimination, breach of an obligation, or breach of legal professional privilege. If a person required to produce documents makes false statements or omits important facts, he or she will be guilty of an offense. Similar to production orders are notices to financial institutions, whereby an officer may give a written notice to a financial institution to provide information or documents to an authorized officer if the officer believes that the information would help determine whether any proceeding under this Act will be initiated against a person.

Monitoring Orders A judge may issue a Monitoring Order requiring a financial institution to provide information about transactions conducted during a specified period of not more than three months. The judge making the order must have reasonable grounds to believe that the person has committed or is about to commit a serious offense, was or will be involved in the commission of an offense, and has or will benefit from an offense. Those complying with the order enjoy immunity in regard to their actions.

Search Warrants A magistrate may issue a search warrant to an authorized officer for the search of premises if satisfied that there are reasonable grounds for suspecting that there is or will be evidentiary materials or tainted property within 72 hours. A search warrant can be obtained by telephone or other electronic means but the circumstances must be serious and urgent. If the applicant has reasonable grounds to suspect that firearms may be used, he or she must state the grounds for that suspicion. Things seized during a search will be in the custody of the head of the enforcement agency executing the search and is responsible to preserve its value and form.

Access to Tax Information The Commissioner of Taxation may disclose information acquired under the provisions of taxation law to an authorized officer of a law enforcement agency if satisfied that the information is relevant to making or proposed making of a proceeds of crime order. In addition, the DPP and the police have access to databases maintained by the Australian Transaction Reports and Analysis Centre (AUSTRAC) containing data on significant cash transactions by cash dealers in Australia, reports by travelers where more than AUD $10,000 is carried in or out of Australia, and reports of international funds transfer instructions.

Management of Seized Property

Preservation of restrained property—Official Trustee Custody and control of restrained property is given to the Official Trustee by the court. He or she is able to recover the costs incurred after forfeiture. Orders can be varied to enable property to be sold or leased, with the proceeds of sale being restrained or rent being applied to make mortgage repayments. Property losing its value can be sold.

Although the Official Trustee is protected from any damage claims related to managing the property, the Commonwealth may be liable to pay compensation pursuant to the undertaking if the property suffered a loss while under a restraining order. Net proceeds from sale of forfeited property and money paid in satisfaction of pecuniary penalties are paid into the Confiscated Assets Account. Money can be used to pay foreign governments and states in recognition of the contribution they made to a recovery in a particular case or to satisfy the Commonwealth’s obligation with respect to a registered foreign property; payments also are made to the Legal Aid Commission. The Commonwealth PoCA does not contain any provision paying compensation to victims.

The Proceeds of Crime Act of 2002 is a comprehensive and complex legislation providing for a number of conviction and non-conviction based legislation, including literary proceeds, pecuniary penalties, and in rem forfeiture proceedings. The law was amended in 2010 with the Crimes Legislation Amendment,



introducing unexplained wealth orders. The law came into effect in late December 2010. Inclusion of UWOs in the PoCA permitted the courts to forfeit unlawfully acquired property across the country, in all states and territories if the Commonwealth laws are violated. Although the PoCA ‘02 already contained provisions reversing the burden of proof to the respondent in confiscation proceedings, introduction of unexplained wealth orders authorized the government to target property solely on the grounds that it constituted unexplained wealth. Unexplained wealth orders further enhanced the powers of the state in the fight against organized crime. UWO combined with the powers of the Australian Crime Commission (broad powers to use examination orders without a court order) present a formidable tool in the hands of the government. The only deficiency or the weakness of the law is the requirement that the state has to show on preponderance of evidence that the respondent has committed a specific federal offense. Since no cases have been instituted to date under unexplained wealth laws, its efficiency and operation is yet to be assessed.


Country Focus –Australia/Northern Territory 94

3.2.1.4 Northern Territory –Criminal Property Confiscation Act 2003

Background

NT introduced unexplained wealth laws in 2003 under the Criminal Property Forfeiture Act (CPFA), mirroring the provisions of the CPCA of WA. However, it seems that there are differences between the two that led the Parliamentary Joint Committee for Australian Crime Commission (ACC) to evaluate the NT Act as more successful in using its unexplained wealth laws. Similar to the WA Act, the NT Act provides for conviction- and non-conviction-based forfeitures regimes, including unexplained wealth, criminal benefit, and crime-used property declarations. Criminal benefit and crime-used property can be handled under both conviction- and non –conviction based sections. If a person has been convicted of an offense a court will make an order depriving the respondent of his/her assets or property in a civil proceeding separate from the criminal proceeding in which the respondent was tried. However, such an order can be made even if the person is not convicted of an offense, but there are grounds to believe that an offense was committed. The prosecution does not have to establish a causal link between an offense and the property. Further, these forfeiture schemes can be directed against the property (in rem) if the owner of the property cannot be identified and against a person (in personam) if the owner of the property is identified. Unexplained wealth declarations are always in persona.

Criminal Property Forfeiture Act

The objective of the Act, as defined in the preliminary section of the statute, is to target the proceeds of crime in general and drug-related crime in particular to prevent unjust enrichment of persons involved in criminal activities.168 For the purpose of the statute, a person is taken to be involved in criminal activities if he/she is declared a drug trafficker in accordance with the Misuse of Drug Act of 1981, or if an unexplained wealth or criminal benefit declaration is made against him or her, or if the person is or was found guilty of a forfeiture offense. However, declaration enabling the state to require forfeiture of property is made even if no one is charged with, or found guilty of, an offense. It is sufficient to establish that some offense was committed. The court will forfeit a property regardless if it is owned or effectively controlled by the person involved or considered to be involved in criminal activities. NT uses the funds from the forfeited property to cover costs of the state to fight criminal activities. The competent court to hear and make unexplained wealth orders is the Supreme Court of NT.

Proceedings under Unexplained Wealth Orders

Police and the DPP can apply to a local or a supreme court for a restraining order ex parte. The competent court will make a restraining order applying to all or parts of the property, prohibiting any person of disposing or otherwise dealing with the property as specified in section 55 of the Act if the respondent has been charged with an offense or is declared a drug trafficker or if an application is made or will be made within 21 days for an unexplained wealth, criminal benefit, or crime-used property declaration. In hearing the application, the court must consider each ground showed by the prosecution and specify in the order the grounds on which it bases the order. A notice will be sent to the respondent as soon as practicable notifying him/her of the restraining order. However, if the court considers that the affidavit contains information that may prejudice an ongoing investigation the information will be limited to a notice. The respondent can object within 28 days to the restraint of the property and is obliged to give a statutory declaration within seven days after receiving the notice, giving information on other known owners or people with an interest in the property. The restraining order can be in force for an unlimited period of time or as specified in the order made by a court.

The court may set aside the restraining order if the respondent is not convicted of an offense or the reasons for which the order was made cease to exist. Notice of setting aside the order is sent immediately

168See Section 3 of the Criminal Property Forfeiture Act 2000, Northern Territory of Australia



to the respondent. A court may specify in a restraining order whether the property will be moved or not, appoint a public trustee to manage and control the property, as well as determine whether the living expenses of the respondent or his/her dependents will be covered by the profits derived from the restrained property.

A restraining order of immovable property takes effect when it is registered under the Land Title Act and the Registers - enters a statutory restrictions notice in the land register (section 53).

The respondent whose property is the subject of the restraining order may file an objection with a competent court within 28 days disputing the grounds on which the order was made. The court may set aside a restraining order if it is satisfied that the respondent charged with an offense or against whom an unexplained wealth , crime-derived or crime-used declaration is made does not own or control the property or he/she has given it away.

Issuance of Unexplained Wealth Declaration The DPP may apply to the Supreme Court169 for an unexplained wealth declaration against a person (in personam) under section 67 of Act. Unexplained wealth is defined as the difference between the respondent’s total wealth and the respondent’s lawfully acquired wealth. The respondent’s total wealth consists of all items, services, advantages, and benefits that a person owns or effectively controls or has given away, while the respondent’s lawfully acquired wealth consists of all items, property, and services, advantages lawfully acquired.

For a court to make an unexplained wealth declaration it is sufficient to establish that it is more likely than not that the respondent’s total wealth is greater that his or her lawfully acquired wealth. When deciding whether the person has unexplained wealth, the court presumes that all the property, services, benefits, and advantages are acquired unlawfully unless the respondent is able to establish the contrary. The court also considers the respondent’s income and expenses at any time or at all times, assesses the difference between the respondent’s total wealth and lawfully acquired wealth, and specifies its value. If a court issues a unexplained wealth order the respondent is obliged to pay to the NT the amount specified by the court or the debt will be satisfied by forfeiture of the property under restraining order.

Criminal Benefit Declaration

A police officer may seize, retain, or guard for up to 72 hours the property suspected of being crime used or crime derived or owned or controlled by a drug trafficker. A local court may make an interim restraining order prohibiting anyone from dealing with the property if it is satisfied that an application for a restraining order will be made against a person or the specified property. Application for a restraining order can be made by telephone or other electronic means. Such order is in force for only three days. Following the interim restraining order a member of the police or the DPP, depending on the court jurisdiction, can apply for a restraining order to a Local or Supreme Court. A restraining order can be made against property or against property (in rem) for crime-used or crime-derived property or against property owned by a specified person (in personam) if the person is or will be charged with commission of an offense or will be declared a drug trafficker. Hearings for the application of the restraining order can be held in closed sessions and the court may allow only certain individuals to attend the session. Proceedings for making a restraining order for crime-derived and crime-used property are the same as for unexplained wealth orders described above.

A court may, on the application of the DPP, declare that property of equivalent value owned or controlled by the respondent be substituted for the crime-used property if it is more likely than not that the respondent has made criminal use of property and the crime-used property is not available for forfeiture. Crime-used property substitutions can be made against two or more respondents in regard to the same property.

169 The Supreme Court is the only court with jurisdiction in proceedings for an unexplained wealth declaration. The Local Court has no jurisdiction over these proceedings.



Regardless of whether the respondent has been convicted or not for an offense, and if the prosecution is able to establish that the property is more likely than not crime-used property, it is presumed that the respondent made criminal use of the property unless the respondent is able to establish the contrary. The burden of proof lies with the respondent to present evidence and fact to satisfy the court that the property is not crime-used property. Property is considered crime used if it is used or intended to be used, by the respondent alone or with anyone else, for commission of an offense. The court making the crime-used property substitution declaration will order the respondent to pay to the NT the amount specified in the order.

Criminal benefits are considered property wholly or partly derived, directly or indirectly, from an offense and considered crime derived regardless of whether anyone has been charged or convicted of an offense or whether a person who directly or indirectly derived benefit from an offense is identified and was involved in the commission of an offense. Crime-derived property can be stolen property, property acquired lawfully but with unlawful sources, and any monetary value acquired in Australia or elsewhere from commercial exploitation of any product of public broadcast. Once property becomes crime derived, it remains crime derived even if it is disposed of unless it is acquired by an innocent person or disposed of in accordance with a court order.

The Supreme Court must declare that the respondent has acquired a criminal benefit if it is more likely than not that the respondent was involved in the commission of an offense and that the property, services, advantages, or benefits were wholly or partly derived, indirectly or directly, as a result of the respondent’s involvement in the offense whether or not the property was lawfully acquired.

The court will presume that all the property is acquired as a result of the respondent’s involvement in the commission of a forfeiture offense unless the respondent is able to establish the contrary. The respondent has the burden to present facts and evidence to convince the court that his/her property has been lawfully acquired. Property is lawfully acquired only if it was acquired through lawful means. When the court makes a criminal benefit declaration it specifies the value of the benefit in the order and obliges the respondent to pay an amount equal to the value to the NT.

Forfeiture If the person under any of the forfeiture schemes described above fails to pay an amount specified in the order to the NT the DPP may apply to the Supreme Court for a forfeitable property order enabling the prosecution to require forfeiture of property subject to the restraining order or property not owned by the respondent if it is more likely than not that the respondent effectively controls it and it satisfies the respondent’s obligation to the NT.

If a person is declared a drug trafficker all property subject to restraining order owned or controlled by the person will be forfeited to the NT. Further, a member of the police or DPP may apply and a court may make a forfeiture order if it is more likely than not that the property is crime used or crime derived. For the court to make such an order the property must be under restraining order and the period for filing an objection of the restraining order has expired or the objection has been heard and determined. The court must make a forfeiture order even if no one has been identified as the property owner. The court may also order forfeiture to NT of property subject to a restraining order if an unexplained wealth, criminal benefits, and crime–used substituted declaration has been made against the person who owns or effectively controls the property.

After the court makes the forfeiture order in relation to property the DPP must inform the Registrar of the order and provide a copy of the declaration order and particulars of forfeiture.

Investigation and Search The process and requirement of investigation and search are unique for all forfeiture regimes provided for in the Criminal Forfeiture Act of NT. A financial institution can volunteer or can be required by the DPP or police force to provide relevant information if there are reasonable grounds to believe that information may be important to an investigation or is necessary in making a decision whether to apply for an unexplained wealth or a criminal benefit or crime-used declaration. The



DPP can require a financial institution to provide information on a person, his/her account, and transactions of the account within seven days after the receiving the notice. If the institution fails to comply with the order or provides false or inaccurate information it is considered that the financial institution has committed an offense. Otherwise, no lawsuit can be instituted against a financial institution for information provided to the police or prosecution.

Examinations, Production, and Monitoring Orders The DPP may apply ex parte and the Supreme Court may order a person to submit to an examination about any of the matters related to the wealth, liabilities income, and expenditure of a person who has been convicted of a forfeiture offense or is suspected of having unexplained wealth, or is a declared drug trafficker. The examinee is required to give the court any documents including property tracking documents and information in his/her possession or control. The examinee may be represented by his/her legal representative and is not allowed to contravene the examination. A person who does not comply with the order can be imprisoned for up to five years, and corporations can be sanctioned to pay an amount that is equal to the value of the property. No one is excused from complying with the order under the pretext that doing so could lead to self-incrimination or breach of professional obligation. Statements given by the examined person can be used in a proceeding under this Act or any other civil proceeding, but not in a criminal proceeding, unless the person gives false or misleading information. Subsequently, a court must order a person to produce the property tracking documents170 if the court suspects that the person has the documents in his/her possession or control. Anyone contravening the production order commits an offense. Further, the DPP may also apply ex parte for monitoring and suspension orders that order a financial institution to monitor an account of a person suspected to have benefited or is about to benefit from an offense. The financial institution is obliged to comply with the order and give information to the DPP or a police officer about all transactions carried out through an account held with the institution by a person. The monitoring order can be in force for up to three months.

Secrecy requirement The statute prohibits any person who has been the subject of a production, monitoring, or examination order to disclose to any other person the fact that a notice was served on him/her, that he/she was the subject of such order or the information given in compliance with the order. One exception is for a corporate officer enabling him/her to disclose restricted information to the DPP or police, an officer of the corporation, and a legal practitioner for the purpose of obtaining legal advice or ensuring compliance with the order.

Detention, Search, and Seizure A member of the police force is authorized to stop and detain a person who is suspected to own or control property liable for forfeiture or possesses property tracking documents. Similarly police can detain a person holding property liable for forfeiture for another. To search premises, baggage, packages, or any person, a member of the police must obtain a search warrant from the Justice of Peace. Application can be made by telephone or other electronic means stating under oath grounds on which he/she bases the suspicions that there are or will be property tracking documents or property liable for forfeiture within the next 72 hours. If the applicant has reasonable grounds to suspect that firearms may be used he/she needs to state the grounds for that suspicion. A member of police may also detain and seize documents found in the course of the search, take extracts, make copies, download or print out any documents containing relevant information, as well as require any person to give them information in their possession or control. The search warrant may be executed at any time and will continue to be in force in 30 days.

Management of Seized Property

Control and management of seized property is the responsibility of the Commissioner of Police, while for the restrained and forfeited property is the responsibility of the Public Trustee or a person appointed by the Trustee or the owner of the restrained property. The Public Trustee may manage and control the 170A document is a property tracking document if it helps identify or locate crime-used property or crime-derived property, determine the value of the property and identify or locate any or all of person’s wealth.



property or any funds held in an account of a financial institution which may be transferred to him/her on his/her request and take all reasonable steps to ensure that the property is appropriately stored or managed and maintained until it is returned to the owner, sold, destroyed or otherwise disposed of. The statute provides for destruction of property if it is in the public interest or its sale if the property is or will deteriorate substantially if retained. The Public Trustee is entitled to receive fees for its services and it is liable for taxes only to the extent that those can be reimbursed from rents and profits derived by the property.


Country Focus –Australia/New South Wales 99

3.2.1.5 New South Wales—Criminal Asset Recovery Act 1990

Background

A conviction-based confiscation law was adopted in New South Wales in 1989 with the Confiscation of Proceeds of Crime Act (1989). Under this law, the court can make an order for the confiscation of assets from a person who has been convicted of a criminal offense. In 1990, the Criminal Asset Recovery Act (CARA) of 1990 was adopted by NSW. This was the first jurisdiction in Australia to introduce non-conviction-based civil asset forfeiture laws. In 2010, NSW followed the lead of other jurisdictions and amended CARA by adopting provisions on unexplained wealth. The amendment bill was adopted in September 2010.

The purpose of the NSW PoCA is to provide for the confiscation of interest in property of a person engaged in serious crime related activities in order to enable proceeds of serious crime related activities to be recovered as a debt to the Crown.

Criminal Asset Recovery Act 1990

The principal objectives of the NSW CARA of 1990 are to: (a) to provide for the confiscation, without requiring a conviction, of property of a person if the Supreme Court finds it to be more probable than not that the person has engaged in serious crime related activities, and (b) to enable the current and past wealth of a person to be recovered as a debt due to the state if the Supreme Court finds there is a reasonable suspicion that the person has engaged in a serious crime related activity (or has acquired any of the proceeds of any such activity of another person) unless the person can establish that the wealth was lawfully acquired; (c) to enable the proceeds of illegal activities of a person to be recovered as a debt due to the Crown if the Supreme Court finds it more probable than not the person has engaged in any serious crime related activity in the previous six years or acquired proceeds of the illegal activities of such a person, and (c1) to provide for the confiscation, without requiring a conviction, of property of a person that is illegally acquired property held in a false name or is not declared in confiscation proceedings; and (d) to enable law enforcement authorities effectively to identify and recover property.171 Proceedings under Unexplained Wealth Orders in NSW

The first asset forfeiture step is an order whereby the property of a person who has engaged in serious criminal offenses can be forfeited to the state.

Restraining Orders The Supreme Court will make a restraining order on the application of the Commission172 supported by an affidavit of an authorized officer stating grounds based on which he/she suspects that the person whose property is the subject of the order has engaged in a serious criminal activity and has derived property from it. The Commission may make an application ex parte to the Supreme Court which may require that the parties be notified of such order if it considers it reasonable. Interested parties, upon receiving the notification, may appear at the hearing and produce evidence with respect to the property in question. A provision permits urgent applications to be submitted by telephone or other means of communication, e.g., radio, facsimile, or email, if the application is supported by a statement of the officer that the order is required urgently because of the risk that funds may be withdrawn or it is not practical for an officer to appear in person. A restraining order cannot apply to an interest in property acquired after the order has been made unless it is specified in the order. The NSW Trustee and Guardian are responsible for management of some or all interests in the property. The court can order that reasonable living and legal expenses of any person who has an interest in property or his/her dependents be covered by the restrained property. The NSW Act provides that a maximum

171Criminal Asset Recovery Act 1990, last accessed February 22, 2011, available at: http://www.austlii.edu.au/au/legis/nsw/consol_act/cara1990272.txt 172“Commission” means the New South Wales Crime Commission constituted under the New South Wales Crime Commission Act 1985.



allowable cost will be set by a regulation in order to limit the amount of legal expenses to be met out of the property.

The Supreme Court, on the application of the property owner within 28 days from the day the order was made, can set aside the order if the Commission has not satisfied the court that there are reasonable grounds for suspicion that the person was engaged in serious crime or has derived property from it.

In addition, when the court makes a restraining order it can also make other ancillary orders such as an order varying the interests in property, an order for the examination on oath of the property owner and any other person before the court or an officer of the court, and/or an order authorizing seizure of property or assigning a trustee or a guardian over the property. The person being examined is not exempt from answering any question or producing any document on the grounds that he/she breaches legal or professional privilege, personal obligation, or that it may lead to incrimination. However, answers given under examination cannot be used in criminal proceedings except if the person objects to answering the questions or producing documents during the examination.

Issuance of an unexplained wealth order The Commission may apply, and the Supreme Court must issue, a unexplained wealth order requiring a person to pay to the Treasurer an amount assessed by the court as the value of the unexplained wealth if the court finds that there is a reasonable suspicion that the person against whom the order is sought was involved in (a) serious crime related activity or serious crime related activities, or (b) acquired serious crime derived property from any serious crime related activity of another person (whether or not the person against whom the order is made knew or suspected that the property was derived from illegal activities)(s. 28A). The court does not need to base its findings on the grounds that a specific offense was committed.

The court is empowered to refuse to issue a UWO, or may reduce the amount that would otherwise be payable as assessed under section 28B, if it thinks it is in the public interest to do so. Section 28B defines “unexplained wealth” to be the whole or any part of the current or previous wealth of the person that the Supreme Court is not satisfied, on the balance of probabilities, is not or was not illegally acquired property or the proceeds of an illegal activity. “Current or previous health” is considered to be the sum of the values of all interest in property of the person that is under his/her effective control or that he/she has at any time expended, consumed, or disposed of and any service, advantage, or benefit provided at any time to the person or at the person’s request, including property acquired or disposed of before or after the commencement of the NSW Act. Considering the far-reaching powers of this legislation, one limitation was incorporated that empowers the court to consider only the current and previous wealth of the person on which the Commission has provided evidence.

In determining the amount the person is required to pay to the state as a result of proceeds assessment or unexplained wealth order, the court will deduct any amount paid or property already forfeited under another confiscation of forfeiture order, proceeds assessment order, and pecuniary penalty orders.

The burden of proof is on the respondent to prove that the person’s current or previous wealth is not or was not illegally acquired property or the proceeds of an illegal activity.

If conviction of a defendant is set aside or quashed, it does not affect the validity of the proceeds assessment and unexplained wealth order. Further, if any of the above referred orders is made against a person it will not prevent the making of a forfeiture order based on the serious crime related activity. The person whose property is subject of a forfeiture order will be notified of such order. However, his/her absence will not prevent the court from making the order.

The NSW Act provides that if an order will cause undue hardship to a dependent of the person subject to the order, the court will order to pay a specified amount to the dependent, if the dependent had no knowledge of the conduct that led to the order or the dependent is younger than 18 years old and in which case the former does not apply.



The amount defined in the proceeds assessment or UWO is considered to be a debt payable to the Crown which is paid to the Treasurer and credited to the Confiscated Proceeds Account. From the Proceeds Account, the following costs are permitted to be reimbursed: the Treasurer’s, NSW Trustee and Guardian costs and fee for performance of his or her duties, any other amount as required by a Supreme Court order, and to the Victims Compensation Funds. Moneys to this account will be paid after any payments resulting from a court order have been paid as well as other amounts paid to law enforcement, victims’ support programs, crime prevention programs, programs supporting safer communities, drug rehabilitation, or drug education.

The court will assign a NSW Trustee and Guardian to take care of the property or of an interest in property until forfeiture order is made. Once the court has made the forfeiture order, the court will, upon application by the NSW Trustee and Guardian, make an order directing the Trustee to sell or otherwise dispose of property or specified interest in property and execute any deed or instrument. From the proceeds the Trustee will pay fees and expenses incurred by him/her in performance of the duties.

Proceedings under a Proceeds Assessment Order

On application by the Commission the Supreme Court must make a proceeds assessment order requiring a person to pay to the Treasury an amount assessed by the courts to be the value of the proceeds derived from unlawful activities. The Supreme Court must make a proceeds assessment order if it finds that it is more probable than not that the person who is above 18 years, was engaged over the past six years in serious crime related activity involving indictable quantity or in offenses punishable by five years of imprisonment (section 27) and the person has derived proceeds from illegal activities and knew or ought reasonably to have known that the proceeds were derived from illegal activity. The court does not have to base its decision on findings that a particular offense was committed. It is sufficient to find that some sort of offense was committed.

In assessing the proceeds derived from illegal activity the court will consider the following:

the money and value of an interest acquired by the defendant or another person as a result of illegal activity;

the value of any service, benefit, or advantage provided for the defendant (or another person) because of the illegal activity;

the market value of a plant or drug similar to any involved in the illegal activity, and the amounts that were ordinarily paid for an act similar to the illegal activity;

the value of the defendant’s property before and after the illegal activity; and the defendant’s income and expenditure before and after the illegal activity.

If the evidence provided at the hearing shows that the value of defendant’s property after an illegal activity exceeds the value of his/her property before the activity the court will treat the excess as having derived from illegal activities except if the court is satisfied the excess was due to causes unrelated to an illegal activity. Similarly, if evidence is provided at the hearing of the defendant’s expenditure during the period of six years, the court is to treat any such amount as proceeds derived from an illegal activity except to the extent that the court is satisfied the expenditure was funded from income or money from other sources unrelated to an illegal activity. The court will not subtract expenses incurred by the defendant in relation to the illegal activities or any proceeds derived as an agent on behalf of another person from the proceeds assessment order.

From the above, although not directly stipulated, it can easily be concluded that the burden of proof is on the defendant to give evidence to the court of the legal origin of his/her property.

Investigation and Search - Search Warrants The law provides that an authorized officer may apply to an authorized official for a search warrant if he/she has reasonable grounds under suspicion that there is or will be evidentiary materials or tainted property within 72 hours. The authorized officer, if satisfied that there are reasonable grounds for doing so, may issue a search warrant to enter the premises and search for



any or all of the property or evidence. Authorized officers conducting the search may seize anything that they may suspect is evidentiary material or tainted property and have the power to remove it from the property or guard it on those premises for seven days unless a restraining order is made.

Production Orders The Supreme Court may make a production order requiring a person to produce or make available one or more property tracking documents to an authorized officer for inspection. An authorized officer applies for a production order on oath setting the grounds based on which the officer suspects that a person has possession or control of a property-tracking document(s). This excludes banker’s books, meaning any accounting records of a bank used in its ordinary business of banking. The authorized officer can inspect, examine, take extracts from, or make copies of the documents. The person is not excluded from producing a document on the basis of self-incrimination, breach of an obligation, or disclosure of legal professional privilege. The person subject to a production order has been given the right to apply to the Supreme Court for a variation order to make the document available to an authorized officer in the place where they are usually held. If a person fails to comply with the order or provides incorrect information, the person can be imprisoned for up to two years. The person is also prohibited from sharing the information that he/she was a subject of a production order.

Monitoring Orders The Supreme Court may make a monitoring order, on the application of an authorized officer, requiring a financial institution to provide information about transactions conducted during a particular period if the court is satisfied that there are reasonable grounds for suspecting that the person against whom the order is made has been or is about to commit a serious crime related activity or has acquired or is about to acquire, directly or indirectly, any serious crime-derived property or any fraudulently acquired property. The monitoring order applies to transactions conducted during the period specified in the order but not later than three months after the date of the order. Those complying with order enjoy immunity in regard to their actions taken. However, if the financial institution fails to comply with the order it will face a penalty.

NSW had in place a broad range of conviction and non-conviction forfeiture laws targeting property that has derived from, or used, in criminal activity. It was the first state in Australia to introduce a non-conviction forfeiture law in the 1990s allowing the state to target assets of a person even if he has not been convicted of an offence. However, in 2010 it introduced UWOs furthering expanding the powers of the existing regime allowing the state for the first time to target assets without a prior finding that a person has been engaged in serious crime. Distinct from other Australian states, NSW has entrusted the powers to pursue forfeiture cases not to the DPP but to a separate entity NSW Crime Commission. The NSW Crime Commission will be also authorized to pursue UWO cases. Since the law has been recently amended no cases have been yet made and its application and effectiveness is yet to be determines.


Country Focus –Australia/Evaluating the Effectiveness 103

3.2.1.6 Evaluating the Effectiveness of Australia’s UWOs

Evaluating the effectiveness of any law, especially the effectiveness of unexplained wealth laws, is a complex and difficult task. UWOs were introduced as a new and powerful weapon against any form of crime, given that the expectations of their impact on fighting and deterring crime were very high. In reality, however, their practical application has proven complex, time and resource consuming, and highly unpredictable. Their controversial nature, accused of breaching civil rights and the principles of common law, brought them under public and media scrutiny. There continues to be tension between those who ask why these laws are not applied more often and those who think these laws should not be used at all because they grossly violate basic rights and are a disproportionate response to crime. The truth lies somewhere in between—these laws have the potential to affect and reduce crime, but they cannot be viewed as a cure-all for everything. It has been said that UWOs are effective in cases when progress against crime cannot be made through the normal course of criminal law, but they should be applied as a last resort.

To gain an overall perception of the impact of unexplained wealth orders on fighting and deterring crime, the study team solicited the opinions and views of agencies and individuals who were directly involved in unexplained wealth (e.g., prosecutors, police, intelligence agencies, defense bar, academics, and civil society) activities. Although this approach has limitations, in that it surveys the opinion of only a small group of people it does express an informed opinion of the impact of the law. In this regard, it must be noted that the Commonwealth of Australia has only recently enacted unexplained wealth orders (May 2010) and no cases have been brought under this scheme; a few cases are under consideration and are expected to commence soon. However, given the sensitive nature of ongoing investigations, no information was available on these. Thus, the quantitative evaluation of the effectiveness of unexplained wealth orders is focused on WA since that is the only jurisdiction with available data.173

Australian academics, lawyers, and civil right groups have been critical of the Criminal Confiscation Act of WA, describing it as the most far-reaching confiscation regime compared to other forfeiture regimes in the world. They contend that unexplained wealth provisions have the potential of violating civil rights and the principles of common law, including the sanctity of private property, the right to privacy, the right to secrecy, and the right to silence.

Although the NT Forfeiture Act was modeled after the WA Criminal Property Confiscation Act (CPCA), it is widely believed that it has improved and advanced it. A statement to that effect was given by the Parliamentary Joint Committee of the Australian Crime Commissions (PJC-ACC) when reviewing legislative strategies to combat crime. Representatives of the PJC-ACC believe that the NT Forfeiture Act contains a number of differences that are considered essential in mitigating the effect the Act has on people’s lives and rights. Comparatively, the UWO law adopted at the Commonwealth level has fundamental differences from the WA and NT statutes, some of them heavily influenced by the Commonwealth constitution.

The differences between the WA and NT Acts result primarily from the influences from other Acts in effect in the state and in the NT Constitution. Because the NT is a territory, its constitution stipulates that property cannot be forfeited unless it is done on “just terms”; as a result, the NT statute provides that property will not be automatically forfeited after the court has made an unexplained wealth declaration until the DPP has made an application for forfeiture to a competent court. Making a forfeiture order is an additional safeguard built into the statute, requiring judicial review of the forfeiture order and providing an opportunity for amendment or revocation of an order if new evidence or facts come into existence. This provision does not exist in the WA statute whereby after the court has made an unexplained wealth declaration the property subject to an order is forfeited automatically. 173 Two other states/territories have UWOs. However, we selected WA as the focus for our study for several reasons: limited resources; it was the first state to introduce UWOs; it is one of the largest jurisdictions that have enacted UWOs; and it is one of the states that has most frequently used UWOs.



Similarly, the NT’s Sentencing Act of 1995 allows the court reviewing the application for unexplained wealth to take into account the offender’s cooperation as a mitigating factor when imposing a sentence. The respondent’s cooperation is not considered by the court when imposing forfeiture in WA courts.

Finally, the NT has set a higher threshold for declaring a person convicted of a drug-trafficking offense, a declared drug trafficker. The threshold in WA is set to one offense meaning that a drug trafficker can be convicted of only one offense before he or she is declared a drug trafficker and has all of his or her property forfeited. The threshold of the amount of drugs trafficked is also very low in WA. It is sufficient that a person be found guilty of trafficking more than 24 grams of drugs to be declared a drug trafficker. This threshold is higher in NT where a person must be convicted of three related drug offenses before he or she can be declared a drug trafficker. In addition, the PJC-ACC notes that NT uses “an investigative and prosecutorial model that has a much greater level of interaction between prosecutors, police, and the Department of Justice.” 174

Unexplained wealth provisions of the Commonwealth reflect lessons learned from WA and NT, international experience as well as a rich and in-depth public debate held in Australia. As a result, the PJC-ACC decided that unexplained wealth laws are a significant and effective tool that can be used to prevent and deter crime, disrupt criminal enterprises, target the profit motive of organized criminal groups, and ensure that those benefiting from organized crime are captured. However, the UWO law introduced by the Commonwealth differs from the UWO laws of NT and WA providing for more legal remedies for the respondent and his or her dependents, limiting arbitrary application of the law and incorporating safeguards to protect civil rights and limit potential arbitrary application of the order.

First, the Commonwealth restraining order provisions are narrower than those in the NT and WA. The language of the Commonwealth statute empowers the court to consider whether a restraining order should be made or not. Second, the standard of proof the Commonwealth needs to put a restraining order in place is considerably higher than that required under the WA and NT statutes. For a court to make a restraining order under the federal statute, the Commonwealth must show that there are reasonable grounds to suspect that the respondent owns or possesses unexplained wealth and to establish a nexus between the property and a federal offense or a state offense with a federal aspect. Including the requirement to show a nexus between the property and an offense has raised the threshold of evidence the state must meet to obtain a successful application under unexplained wealth. Although this was not contemplated when the law was drafted, the federal constitution dictated that there must be a nexus between the property and an offense. The requirement for making a preliminary UWO is not as strict because it does not require a link between the property subject to the application and an offense. For a court to make an unexplained wealth declaration it is required that a preliminary forfeiture order be in place. Another key difference is the requirement for the prosecution to show that the respondent has committed an offense or that there are reasonable grounds to suspect that the person was involved in or has committed an indictable offense which can be an indictable offense violating the laws of the Commonwealth, a foreign offense, or a state offense. Such a requirement does not exist under the WA and NT laws. The federal law also does not provide for automatic forfeiture as do the two other laws, whereby property under a freezing order will be automatically forfeited, vesting it to the government if the owner does not file an objection within 28 days.

With the intent of protecting the rights of dependents and innocent third parties, the Commonwealth law also allows the forfeited or frozen property to be used to cover legal fees of the respondent if the respondent does not have any other means to cover such costs. The court also can allow reasonable living and business costs to be drawn from the property subject to a freezing order if the dependent is under age 18 and has shown that he or she could not have reasonably been aware that the property was derived or used in or in connection with an offense. Significant changes have been made to the UWO

174 PJC – ACC “ Inquiry into the legislative arrangement to outlaw serious and organized crime groups”, August 2009, p.-116



Commonwealth law in an effort to make its provisions more effective and to bring the law in line with the principles of the common law and respect of basic rights.

A number of academics175contend that it was considerably easier to introduce and implement unexplained wealth provisions in Australia in the absence of a written Bill of Rights entrenched in the constitution. It was held that the courts have been reluctant to interpret provisions to abrogate important common law rights, privileges, and immunities in the absence of clear words or a necessary implication to that effect (Grono, 2009).

Figure 2: Key features of different Unexplained Wealth Orders in Australia

Western Australia Northern Territory Commonwealth New South Wales

Enacted in 2000 in Personam – action

brought against the person

The burden of proof shifts is reversed to the property owner

No requirement to show a nexus between an offense and property

No court discretion

Enacted in 2002 in Personam – action

brought against the person

The burden of proof shifts to the property owner

No requirement to show a nexus between an offense and property

Court has discretion to decide if making of an order is done on “just terms:

Enacted in 2010 in Personam –

action brought against the person

The burden of proof shifts to the property owner

The state has to show a nexus between an offense and the property

Court has broad discretion when making an order

2010 in Personam – action

brought proceeding The burden shifts to the

respondent The burden of proof

shifts to the property owner

The state has to show a nexus between an offense and the property

Court has broad discretion when making an order

Public Debate

Initiatives to introduce measures to fight organized crime by attacking profit came as early as the 1970s and 1980s when royal commissioners conducted inquiries that revealed high levels of organized crime. Each of these commissioners recommended adopting measures to attack the primary motive of criminal activities—profit.176 However, the Australian government was reluctant to proceed and adopt non conviction based forfeiture laws fearing that they might be opposed by various political and civic groups. Ultimately, in early nineties NSW went ahead and adopted non conviction based laws and later in the decade the WA adopted a non-conviction based forfeiture law including UWO. Years later, similar, if not stronger, support came from law enforcement agencies such as the AFP, ACC, the police of most jurisdictions, and the Tax Office. Evidence of the effectiveness of UWOs also was provided to the Australian Joint Parliamentary Committee by international law enforcement agencies from Italy and the United Kingdom. The representative of the Italian National Police, talking about the importance of depriving criminal of their assets, noted that “mafia members are prepared to spend time in prison, but to take their assets is to really harm these individuals.” In contrast, other groups, such as the Law Council of Australia and Civil Liberties of Australia expressed grave concerns over the provisions of the Commonwealth PoCA especially in regard to the impact that UWOs would have on the basic rights of individuals and the public interest. Although they in essence supported the objectives of the bill, they were concerned with the operations of the legislation.

Tom Sherman, in his report on evaluation of the PoCA of 2002, also expressed reservations regarding unexplained wealth laws. He stated that although unexplained wealth orders are undoubtedly effective

175Ben Clarke, David Lusty, Grono. 176David Lusty, “Civil Forfeiture of proceeds of crime in Australia, ”Journal of Money Laundering Control, 5, 2002, p. 345–359.



they should not be introduced by the Commonwealth at this stage; rather, they should continue to be reviewed.177

The debate about unexplained wealth laws has taken place largely in the context of two recent committee inquiries at the Commonwealth level: the PJC-ACC in August 2009 and the Senate Legal and Constitutional Affairs Committee (SLCALC) in September 2009. In 2008, the PJC-ACC initiated an inquiry into legislative initiatives to outlaw serious and organized crime including forfeiture of the proceeds of crime as one of the mechanisms to fight, prevent, and deter serious and organized crime. The PJC-ACC conducted the inquiry178 by examining the effectiveness of legislative initiatives, internationally and in Australia and evaluating the impact and consequences of those initiatives on society, criminal groups, and their networks and law enforcement agencies.179 Internationally, the PJC-ACC sent a delegation to the United States, Canada, Italy, Ireland, and the United Kingdom to examine international trends in dismantling and disrupting serious and organized crime and the legislative and administrative approaches. In addition, the committee solicited input from the public at larger, by holding public hearings in large cities and soliciting input from different organizations and individuals regarding effective strategies that had an impact on combating crime. Subsequently, based on the results of the inquiry, the Commonwealth of Australia adopted the Serious and Organized Crime bill in November 2009 which went into effect May 2010. Among other amendments, the bill introduced unexplained wealth, amending the PoCA of 2002.

The Australian Parliament’s approach led to transparent and inclusive debate on the introduction of unexplained wealth orders. Different strata of society were able to present their views, either supporting or dissenting, about the bill. AFP President, Jon Hunt, in its submission to the PJC-ACC, stated the following:

This has been a long time coming. It is imperative that we have strong, tailored and effective laws in place to combat serious organized crime. Our members in the AFP & ACC have been working with antiquated laws that have been grossly inadequate for dealing with sophisticated organized and transnational crime syndicates.180

Further, he held that this law will strengthen the existing legislation by defining new criminal offenses that target those engaged in organized crime, strengthening asset confiscation and anti-money laundering regimes, and requiring individuals suspected of owning unexplained wealth to demonstrate its legitimacy and enhance search and seizure powers and the ability to access electronic data.

The objectives of the unexplained wealth laws support and reinforce those of confiscation and forfeiture laws, as follows:

Deter those contemplating criminal activity by reducing the possibilities to retain profit

Reduce the capacity to reinvest the proceeds in future unlawful activities by taking away the proceeds

Remedy the unjust enrichment.

177Tom Sherman, Report on the Independent Review of the Operation of the Proceeds of Crime Act 2002, (Cth), July 2006. Available at: http://www.ag.gov.au/www/agd/agd.nsf/Page/Publications_ReportontheIndependentReviewoftheOperationofthePrceedsofCrimeAct2002(Cth), accessed January 23, 2011. Commonly referred to as The Sherman Report. 178Parliamentary Joint Committee of the Australian Crime Commission (PJC-ACC), “Legislative Arrangement to outlaw serious and organized crime groups,” available at: http://www.aph.gov.au/senate/committee/acc_ctte/laoscg/report/index.htm, accessed January 21, 2011. 179Terms of Reference of the PJC-ACC, available at: ttp://www.aph.gov.au/senate/committee/acc_ctte/laoscg/report/c01.htm#anc1, accessed January 21, 2011. 180Police Federation of Australia, “Submission to the Senate Legal and Constitutional Affairs Committee Inquiry into the Crimes Legislation Amendment (Serious Organized Crime) bill 2009.



In addition, one of the key arguments presented by the law enforcement agencies is the power of unexplained wealth laws to deprive principals of criminal organizations, or as they were referred to,“Mr. Bigs” of their unlawful property. The main challenge law enforcement agencies and prosecution face is the ability to gather sufficient evidence to prosecute heads of criminal organizations. In most cases, lower level criminals are prosecuted and convicted of offenses but there is never sufficient evidence to prosecute those who orchestrate these activities. This was explained by the Police Federation of Australia in a note sent to the PJC-ACC:

Do Australian police know who is involved in organized and serious crime in Australia? The answer is yes. Can we prove beyond reasonable doubts that these criminals are involved directly in those crimes? The answer is no.…Unexplained wealth is the easiest way as a crime prevention method to stop further crime.

In similar terms, the explanatory memorandum for the Commonwealth bill notes that:

[T]he existing confiscation scheme under POCA are not always effective in relation to those who remain at arm’s length from the commission of offenses, as most of the other confiscation mechanisms require a link to the commission of an offense. Senior organized crime figures who fund and support organized crime but seldom carry out the physical elements of crime, are not always able to be directly linked to specific offenses.

Therefore, unexplained wealth provisions allow the prosecution and the court to attack the profit of these highly profitable criminal networks without the need to prove a causal connection between the offenses and the proceeds. The burden of proof is eased by the fact that it is sufficient for the prosecutor to show that some sort of offense was committed has enabled law enforcement to deprive those benefiting from criminal activities of their profits.

The Australian Tax Office also supported the law, arguing that UWOs would assist it in enforcing tax legislation. The key argument for adoption of unexplained wealth provisions was that it makes it possible to attack and take away the profit from those who have obtained it in an unlawful way by following the money trail. Through these provisions the enforcement agencies target primarily the financial incentive to become involved in the commission of criminal offenses. Many believed that if the incentive were removed many criminal organizations will cease to exist and dismantle. This strategy was proved successful in Ireland, Italy, and other jurisdictions within Australia, where local officials believe (albeit anecdotally) many criminal organizations have ceased to exist and many criminals have relocated their operations elsewhere when the civil forfeiture provisions with reversed burden of proof were adopted. Further, professor Rod Broadhurst, in his submission to the SLCAC in August 2009, observed that “tainted or unexplained wealth may be the only means to reliably identify criminal entrepreneurs whose involvement in organized crime is usually indirect in terms of actual commission.181”

A representative of the Office of the Commonwealth Ombudsman supported adoption of UWOs as a means to fight and deter crime. However, given the wide reach of the powers and the nature of such orders the authorized officers making an application must have reasonable grounds to believe that an offense was committed. Further, in his statement regarding the erosion of privacy rights, he stressed that such measures should be undertaken only when they are necessary and proportional to address the immediate need and are subject to appropriate and ongoing accountability measures and review.

Although law enforcement agencies and some academics strongly supported the law, civil rights organizations, law societies, and other academics strongly opposed it calling it a draconian measure that violates basic rights such as the right to private property, freedom of citizens from unnecessary intervention from the government, and the right to privacy. Clarke holds that “seizure of assets by organs

181 Inquiry into the legislative arrangements to outlaw serious and organized crime groups, Parliamentary Joint Committee on the Australian Crime Commission, August 2009



of the state is coercive exercise of power which should not be undertaken lightly.”182 He also notes that the WA CPCA “represents the most significant encroachment upon citizen’s property rights in Western Australia and possibly Australian legislative history.”183

A key argument against unexplained wealth provisions from civil rights organization is the reversed burden of proof on the property owner and the risk that it could lead to confiscation of property of innocent people. A member of the motorcycling community told the PJC-ACC “the only problem I have with unexplained wealth law is I do not believe most people could actually explain everything they own184.” In the same report, the Law Council of Australia called these laws obnoxious and stated that they were offenses against common law and human rights principles. The Law Council presented its arguments against the unexplained wealth provisions as follows:

The reverse onus of proof undermines the presumption of innocence. Provisions infringe on the right to silence and exclude legal professional privilege. The WA and

the NT provisions allow the DPP to use information obtained during examination for criminal prosecution.

Appeal processes are inadequate. The potential for arbitrary application of the laws, with the use of the laws, can be politically

motivated.185

In a hearing in front of the SLCAC, the representative of the Law Council of Australia also, held that the central problem of UWOs is the lack of the need to show any evidence related to any offense, pleading to include reasonable suspicion that some offense was committed. The laws of the NT and WA do not require showing that an offense was committed.

From the Explanatory Notes on the Criminal Proceeds Confiscation (Serious and Organized Crime Unexplained Wealth) Amendment Bill 2010, it is evident that the government seriously pondered the introduction of reversed burden of proof and its consequences, and has decided to enact them despite the fact that they do breach fundamental legislative principles as a tool to fight the increasing threat from serious and organized crime.

Some believe that the WA and NT provisions erode the right to silence and the right to privacy because they require the respondent or any person knowing anything about the respondent’s affairs or property to disclose that information to the DPP.

Tim Gate of the Law Council argued that:

…absence of requirement to present evidence that shows there are reasonable grounds to suspect that the respondent has committed an offense, or that his wealth is derived from an offense, when combined with the reversed onus of proof, puts the person in a position where the suspicion in relation to the wealth is the sole thing that has triggered forfeiture.

This relates more to the WA and NT forfeiture regimes because the Commonwealth unexplained wealth laws contain provisions that require the prosecution to show reasonable grounds that the respondent has or was involved in commission of an offense. Moreover, the law has specific provisions setting out specific requirements for the affidavit to be considered by a court.

182Ben Clarke, A man’s home is his castle–or is it? How to take houses from people without convicting them of anything: The Criminal Property Confiscation Act 2000 (WA), Electronic copy available at: http://ssrn.com/abstract=1718863, accessed February 8, 2010. 183Ben Clarke Confiscation of unexplained wealth; Western Australia’s response to organized crime gangs, Afr. J. Crim. Just 15 (2002) p. 61–85. 184 Report of the Parliamentary Joint Committee –Australian Crime Committee- Inquiry into the legislative arrangement to outlaw serious and organized crime, August 2009 pg.121(point5.59). 185Ibid. at 40.



Concerns have been raised that unexplained wealth provisions could be easily misused for political or other purposes because the requirements to commence unexplained wealth proceedings are meager and light on the prosecution. It is sufficient that it is brought to the attention of the police that a person owns wealth that could be unexplained wealth to commence a proceeding against a person, which may represent a significant infringement of the person’s civil liberties.

Effectiveness of UWO - Commonwealth

As stated previously, the Commonwealth only recently introduced UWOs, and no cases have yet been instituted under these provisions. When the Commonwealth PoCA was conceived, the powers to institute UWOs were vested on the Commonwealth DPP (CDPP); however, with an initiative undertaken by the Australian Federal Police, the law was amended in 2011186 to include the AFP. As it now stands, both the DPP and the AFP share the powers under the PoCA, including UWOs. The AFP has the same powers and responsibilities to institute any of the proceedings under the Commonwealth PoCA; the decision as to who will pursue the cases will be made by the AFP.

Following the initiative of the AFP to get involved in the forfeiture of proceeds of crime, a new initiative was originated to establish a Criminal Asset Confiscation Task Force (CACTF) modeled after the Irish Criminal Asset Bureau. The idea came about after the AFP representatives visited Ireland to familiarize themselves with Irish forfeiture system. At the time of this writing, the legislation is being drafted and negotiations are ongoing among different agencies about the modalities of the operation and the task force is expected to be established by January 2012. The concept, on which the agency is to be built, is that co-location leads to coordination with staff being shared among different agencies (e.g., AFP, ACC, customs, DPP, and tax administration). This should mitigate a tense relationship between the DPP and the AFP regarding the usage of UWOs as well as the role the DPP should play in the future CACTF. While the DPP believes it must be engaged and act as a filter between the police and the judiciary, the AFP believes that it must lead and is in a good position to deal with the courts independently of the DPP. The AFP expressed concerns that the DPP tends to take a conservative approach and set a higher threshold for evidence than required by the law, and, thus, fewer UWO applications will be brought. On the other hand the DPP is concerned about requirements on undertaking of damages, requesting the DPP to compensate the respondents if unexplained wealth application was not successful, which could lead to bankruptcy of the DPP if cases are not carefully selected and pursued. The AFP, on the other hand, does not view this as an issue and considers the DPP as being too conservative. Although there are tensions regarding their future roles, the DPP perceives a need for future involvement in the task force and the modality of their involvement has yet to be determined.

As stated, no UWO cases have yet been brought on the Commonwealth level, but there are a few cases that the AFP is working with the ACC to prepare. It is important for the United States to continue to monitor the application of UWOs by the Commonwealth of Australia, and track the progress of the application of UWO at the federal level in contemplating introduction of unexplained wealth in the U.S.

In summary, the UWOs of the Commonwealth have higher requirements. They do not have a presumption that the respondent’s property is unlawful unless the respondent is able to establish the contrary and there is a requirement to show on balance of probability that an offense has been committed. Furthermore, the Commonwealth PoCA sets out a three stage process: (1) a freezing order (not mandatory); (2) preliminary UWO; and (3) unexplained wealth declaration. Other differences are that the respondent is eligible for reasonable living and legal expenses and the court has the discretionary power to determine whether making an order will cause undue hardship or injustice.

The shortcomings of the legislation, as viewed by the DPP, are the requirement that an examination order be made before the property is frozen, which may lead to disposition or loss of property. In addition, gifts,

186 Crimes Legislation Amendment Bill, (No.2), 2011, The Parliament of the Commonwealth of Australia.



inheritances, and proceeds from gambling cannot be verified easily and that may lead to unsuccessful applications.

Based on the analysis of the law and on earlier experience of the CDPP asset forfeiture manager, the evidentiary requirements imposed by the law make for a high threshold. The type of evidence required and expected to be provided by the CDPP may be tax records, employment records, inheritance, gifts, and the difference between the total wealth versus specific property.

The DPP considers that the law parallels money-laundering work, and that UWOs will be pursued when there are no other options or when all other options have been exhausted.

Effectiveness of UWOs – Western Australia

Statistical information on the application of UWOs is available through the DPP Annual Reports but there are a number of limitations. For example, funds paid into the Confiscation Proceeds Account from 2001 to 2009 reflect funds recovered from all forfeiture and confiscation schemes available under the Criminal Confiscation Act of 2000. These funds include UWOs, crime-used and crime-derived, as well as declared drug trafficker. Table 3 shows the total amount of funds paid into the Confiscation Proceeds Account. There is a steady increase in funds paid to the CPA, with the largest amount paid in 2007–2008 and 2009–2010. The WA DPP Annual Report 2009–2010 notes that the most significant proportion of confiscated property arises from conviction of an accused drug trafficker and the subsequent declaration that the person is a drug trafficker. The table also shows that the proportion of funds arising from declaration as a drug trafficker make up between 50 and 90 percent of the funds paid into the CPA. As of September 2009, a total of AUD$43,581,117 (US$46M) were paid into the CPA, AUD$6.1M (US$6.4M) of which came from UW unexplained wealth matters indicating that they do not appear to have been used extensively.187

Table 3: Amounts Paid into CPA (WA) and Portion of Funds from Drug Trafficker’s

Table 4: Amounts recovered from the UWO January 2001 to January 2010

No. Type of a case Amount ($Australian) Amount ($US)

1 Suspected drug dealer $2,620,000.00 $2,813,880

2 Suspected drug dealer $1,540,000.00 $1,653,960

187Conversion rates from Oanda Currency Converter- July 3rd, 2011: AUD $1 - US $ 1.074

Period Amount ($AUD) Amount ($US) Declared Drug Trafficker ($US)

Funds Recovered from Other Schemes($US)

2000/01 $417,074.00 $447,020 N/A N/A

2001/02 $779,533.00 $835,503 N/A N/A

2002/03 $1,388,500.00 $1,488,194 N/A N/A

2003/04 $1,170,275.00 $1,254,301 N/A N/A

2004/05 $2,091,774.00 $2,241,963 $1,964,410.05 $277,553.33

2005/06 $2,524,362.00 $2,705,611 $1,312,627.03 $1,392,984.16

2006/07 $5,070,596.00 $5,434,665 $2,903,255.40 $2,531,409.39

2007/08 $12,618,686.00 $13,524,708 $8,650,773.25 $4,873,934.40

2008/09 $7,837,418.00 $8,400,145 $6,510,863.46 $1,889,281.15

2009/10 $13,438,281.00 $14,403,150 $10,768,793.67 $3,634,355.90 Source, WA DPP Annual Report (2009/10)



3 Suspected drug dealer $52,000.00 $ 55,848

4 Suspected drug dealer $200,000.00 $214,800

5 "Bikie" - motorcycle gangs $250,000.00 $268,500




9 Spouse of a suspected drug dealer $200,000.00 $214,800

10 Cash seizure/case dismissed $0

11 Cash seizure $35,000.00 $ 37,590

12 Suspected drug dealer Active Case $ 0

13 Case related to corruption $100,000.00 $ 107,400

14 Theft $150,000.00 $161,100

15 Suspected drug dealer Active Case $0

16 Seized large amount of cash $63,000.00 $67,662

17

UNEXPLAINED WEALTHHUNEXPLAINED WEALTHHO $315,000.00 $ 338,310

TOTAL $6,021,000.00 $6,466,554

Source: WA DPP, July 2011

Based on the data obtained from the WA DPP, as of June 2009, 27 unexplained wealth applications were made since 2000–2001 (see Table 5), of which 21 led to forfeiture of assets. This indicates a high success rate of more than 70 percent. Of all the applications for unexplained wealth, only three were set aside by the court; three others are pending resolution. Of 24 unexplained wealth matters finalized, 22 were settled and only two were litigated (only one led to forfeiture). A high number of cases settled indicate that the WA DPP is inclined to settlement outside of the courtroom. Note that the amount recovered from settlement is generally less than the amount of unexplained wealth identified by law enforcement authorities. However, settlement is favored because it ensures successful and rapid resolution of cases avoiding lengthy and costly proceedings with an unpredictable outcome. Of the two cases litigated only one led to forfeiture. None of the cases reached the High Court of Australia (HCA); all were resolved by the Appellate Section of the Supreme Court of WA.

DPP’s willingness to settle might have been influenced by unsympathetic courts. WA courts, in particular the High Court of Australia, have not looked favorably on the civil forfeiture regimes because they consider them too radical and too infringing on fundamental civil rights. Although no case under the unexplained wealth provisions reached the HCA, other cases under the CPCA were not reviewed favorably and the court has in many instances favored the respondent, thus curbing the powers of the state in forfeiture proceedings.

It is evident that unexplained wealth provisions have not been used extensively in Australia, and in cases when they have been used only a relatively small amount of funds were recovered totaling only AU$6.0M over a period of 10 years in Western Australia. As shown in Table 5, no unexplained wealth applications were brought for 3 years (2004–2007). It is believed that this is due to public criticism of the DPP over



the application of the law to an elderly couple who were convicted of possessing cannabis after their son concealed drugs in their roof.188

However, over the past three years, there has been an increase in applications for UWOs which is justified with an increased allocation of resources into this area in particular into the police (WA DPP). Since 2008, it was decided that 25 percent of funds paid into the Confiscation Proceeds Account will be transferred to the police where they have used the additional funding to hire forensic accountants. In 2001, when the Act was enacted, the Proceeds of Crime Squad (division of the WA police) had one forensic accountant but since then the number of forensic accountants has risen to six. In addition, this is also attributed to the fact that the Confiscation Team of the DPP has expanded over the years, from three to 18, thus increasing the capacity of the Confiscation Team to pursue forfeiture cases.189

Another reason for a rather low number of applications for unexplained wealth declarations is because it is much easier to carry out a confiscation of all property under the provisions of a declared drug trafficker. In a number of cases related to declared drug traffickers, there was unexplained wealth. However because of the provision on automatic confiscation of all property, lawful and unlawful, belonging to a drug trafficker, there was no need to invoke UWO provisions.

Table 5: Wealth Declarations in Western Australia (source WA DPP)

As noted previously, the CPCA of WA, providing a broad range of conviction and non-conviction based forfeiture regimes, is far-reaching legislation that empowers the state to attack the proceeds of crime as well as the property belonging to a criminal/drug trafficker. Given the broad range of forfeiture regimes and the ease of forfeiture of property under the drug trafficker confiscation provisions, UWOs were more time consuming and unpredictable.

Although we have heard repeatedly that unexplained wealth laws are an effective tool in fighting and deterring crime, we found little quantifiable evidence to substantiate those claims in Australia. These laws were introduced with great enthusiasm by legislators as an effective tool in the war against organized and serious crime, raising the expectations that they will be a cure for all problems in the community. It also

188 Lorana Bartels, “Unexplained Wealth laws in Australia,” Trend and Issues in Crime and Criminal Justice, No.395, July 2010, Published by the Australian Institute of Criminology. 189 Ian Jones, Confiscation Practice Manager, WA DPP.

Year UWO Applications

UW Applications Set Aside

UWO Declaration That Led to Forfeiture

No. of Cases Pending Resolution

No. of Cases Settled

No. of Cases Litigated

2000/01 8 1 7 8

2001/02 4 4 4

2002/03 3 1 2 3

2003/04 2 2 2

2004/05

2005/06

2006/07 2

2007/08 2 1 1

2008/09 5 3 2 3

2009/10 3 2 1 2

Total 27 3 21 3 22 2



seems that the support required to enforce and apply these laws have been downplayed, resulting with a low application of this law. The biggest criticism of the WA unexplained wealth regime was that did not meet the expectations that it raised when introduced, targeting “Mr. Bigs,” who is out of the reach of justice and lives well beyond his lawful means. Some of our interviewees who have played a significant role in introduction of unexplained wealth stated that they were disenchanted with the law as it failed to achieve the results it indented to. Others however believed that UWOs have had an impact on reducing crime rates but there is no significant reported impact that made a noticeable change. However, most of the interviewees agreed that UWO had little impact in thwarting crime, criticizing the DPP for not making greater use of its UWO powers. Although many consider that UWOs have the potential to be powerful weapons against crime, they remain a largely untested weapon.

Factors affecting application of UWOs are multiple and complex. One of the leading factors is the existence of automatic confiscation provisions of property belonging to a declared drug trafficker. The requirements imposed on the prosecution are not high and a conviction leads to automatic confiscation. Nonetheless, some argue that because UWOs are a non-conviction–based forfeiture regime, there are situations other than those related to drug traffickers when a UWO could be used. The amount of funds recovered under Declared Drug Traffickers provisions are substantial and may largely use resources that otherwise could have been used for UWO work. As we were told, resources go where there is a need, and in this case, investigative resources are being focused on recovering property through Declared Drug Traffickers provisions.

Another reason there have been only a small number of UWO investigations is that they are resource intensive. To undertake successful UWO applications, a professional forensic accountant is critical along with computer technicians and well-trained investigators. Efforts are being made in this regard in that both the DPP and the police are expanding, hiring forensic accountants and other specialized personnel to escalate their activities. All of the investigative work is performed by the WA state police, who conduct the investigation, gather the intelligence, monitor financial transactions, prepare all the necessary affidavits for applications, and submit them to the DPP for review and final determination on whether or not to pursue with a UWO. This is viewed as a client relationship creating considerable tension between the two agencies, although they continue to work together effectively. The police believe that more could be done and they had high expectations when the law was enacted believing that it would prove to be a powerful tool that enabled them to pursue a broad range of cases. Some police believe the DPP is overly conservative and not aggressive enough in pursuing these cases. The DPP, on the other hand, believes that the police are overly aggressive and that the requirements in the CPCA set a high threshold for the state to show that the person owns or possesses unexplained wealth. It seems that the police are eager to bring cases faster but the DPP is focused on pursuing only feasible cases that are well prepared. The police believe that because the DPP is overly conservative they settle easily and for far less than could be obtained. The DPP, on the other hand, believes that it recovers the optimal amount from each case.

Tensions between the police and the DPP as well as DPP’s reluctance to take a proactive approach in instituting UWOs may be why the WA Attorney General’s Office initiated an inquiry into establishment of a separate entity or a transfer of forfeiture powers to the Corruption and Crime Commission (CCC) of WA. The idea is being discussed but no decisions have been made as to which parts of the Confiscation Practice of the DPP will be transferred to the CCC, only those related to UWO or also crime-used and crime-derived and declared drug dealers. If they follow the model designed by the Commonwealth, they will move toward the Irish Criminal Asset Bureau multiagency model (described supra) bringing the powers of various agencies together under one umbrella agency to facilitate and improve coordination and ensure effective implementation of the law. Thus, there is a temporary moratorium on the review of OWOs until a final decision is made to determine the future use of UWOs.

The DPP stated that one of the main reasons for so few unexplained wealth applications is the standard of evidence imposed on the prosecution. As discussed earlier, although the CPCA provides for reversal of the burden of proof onto the respondent to justify the lawfulness of the property subject to a proceeding,



the threshold for the burden of proof the state must meet in reality is much higher than the burden on the respondent. According to the DPP and the specific requirements in the CPCA the DPP and the police must identify, trace, and value each item of the property of the respondent, show the totality of the respondent’s wealth, and the unexplained portion of the wealth. In a case, this means that if the DPP were to go after a person who does not have a predicate offense they must identify and trace any property, transactions, gifts, purchases, and sales and show that they have reasonable grounds to believe that the person owns unexplained wealth. This requires access to tax and other records and skillful forensic accountants who can compile clear and concise affidavits for the court. Also as noted that Australian tax law differs from U.S. tax law (and as will be discussed later, Ireland as well) gifts, inheritance, and income acquired through gambling is not taxed and need not be reported for tax purposes. This has enabled respondents to discharge their burden of proof by simply stating that the money is a result of gambling or a gift from overseas. Furthermore, the Brigenshaw standard, mentioned previously, sets a standard of proof higher than the balance of probabilities to show that the person owns unexplained wealth. In contrast, the courts have accepted a lower burden of proof for the respondent, whereas a credible denial on oath would be considered sufficient to discharge the burden. A defense attorney corroborated the statement of the DPP that the standard of proof is higher for the state based on the Brigenshaw principle, while the standard of proof for the respondent is much lower. The unpredictable judicial process and the courts leaning or favoring the respondent has caused the DPP to shy away from bringing UWOs.

Although the law does not require a predicate offense, in general, the DPP believes that it must show evidence that the person has been engaged in some sort of criminal activity. In this regard, hearsay evidence is admissible in the court. Defense attorneys believe that the DPP so far has done a good job in showing that the person has been engaged in criminal activity and/or associated with criminals. The key challenges identified by the DPP and police in applying UWOs are lack of resources and skills to effectively perform investigatory work and prepare affidavits that could lead to successful finalization of cases. One approach was to send DPP lawyers to the police to work together in preparing cases, gathering evidence, and setting standards for preparation of evidence. This idea may be workable under the new entity responsible in the future for implementation of UWO.

The key bottleneck of UWO and other asset forfeiture schemes are the delays in hearing cases by the courts. It takes up to three months before a case is heard by the District or a Supreme Court in WA. Similarly when an application for examination order is made it takes up to three months before an order is served onto the respondent and the examination takes place. Because many countries do not contain similar statutes that provide for forfeiture of unexplained wealth it is difficult to successfully forfeit property outside of Australia. Further calculation of UWO is time consuming, labor intensive as it is hard to identify, trace and value property, with an unpredictable outcome.

The most common approach to commencing a UWO order is via an application for an examination order to gather information on properties of the respondent. An example was used by the DPP where a drug dealer known to DPP had transferred all of his property to his mother, through the use of an examination order the DPP was able to gather sufficient evidence to show that the property was in actual control of the respondent). One of the issues that impede the investigation is the intertwined finances or joined ownerships of property by more than one person. However, use of information obtained under an examination order is limited to the forfeiture proceeding and could not be used to press criminal charges. A further limitation imposed by the CPCA is the judicial overview, with the powers vested to a judge to delineate the scope of questions the examinee can be asked and those are frequently around sources and the origin of the property.

From the data available we can discern that most of the cases pursued by the DPP are cases of suspected drug dealers, bikers groups dealing with drug trafficking and cash seizure. Forfeited funds go to a Criminal Proceeds Account, mainly to support crime fighting activities, 25% is given to the police and parts of it goes to support victims of crime.



The team heard that the Act has some deficiencies and that amendments could lead to a more frequent use of UWO. However no legislative proposal has been put forward to amend the CPCA and make it more workable. The next step in WA is determination of where the powers for UWO will lay and how will the new institutional framework look like and the powers attributed to it.

Although relatively few UWO cases have been litigated, Western Australian and the federal courts have played an important role in interpreting provisions of CPCA, narrowing the scope of some of the provisions under the CPCA, raising the threshold the government has to prove and significantly reducing it for the respondents (property owners). In the next section we discuss some of the key cases under CPCA reviewed by the Supreme Court of Western Australia and the High Court of federal government (and equivalent of the Supreme Court in the United States).


Country Focus –Australia/Case Law 116

Australian Case Law

Forfeiture provisions of the Commonwealth PoCA of 1987 were challenged early on by the respondents and defendants affected by them, challenging the proportionality of measures, their unjust nature, and, in particular, the reversal of the burden of proof onto the respondent. However, the courts have upheld the reversed burden of proof acknowledging the need for it in confiscation laws, recognizing the difficulty the prosecution would face in identifying or assessing proceeds of crime in determining the lawfulness of the property or a specific part of the property. An authoritative decision was issued by the High Court of Australia on the topic, justifying the need for reversed burden of proof as follows:

The broad primary principles guiding a Court in the administration of justice are that he who substantially affirms an issue must prove it. But, unless exceptional cases were recognized, justice would be frustrated and the very rules intended for the maintenance of the law would defeat their own objective. The usual path leading to justice if rigidly adhered to in all cases, would sometimes prove but the primrose path for wrongdoers and obstruct vindication of the law... the primary rule should be relaxed when the subject matter of the allegation lies peculiarly within the knowledge of one of the parties190

The necessity of shifting the burden of proof onto the defendant to show the lawfulness of his or her benefit and determine the value derived from criminal activities was acknowledged by the state and federal courts.

The reversed burden of proof was also upheld by courts in WA; although it still continued to be challenged by the respondents. Courts in WA have affirmed the reversed burden of proof to the respondent in two applications for UWOs and other CBD applications. In Dung v. DPP191 the respondent was stopped by the police, and, during search, a sum of AUD$213,852.40 was found in his car. A UWO application was made by the DPP, and subsequently, a sum of AUD$200,000, the lawful source of which the respondent was unable to justify, was declared unexplained wealth and the rest was returned to the respondent. In reviewing the facts of the case, the court cited McKechnie in the matter of Permanent Trustee Co LTD v. The State of Western Australia192 that explains the background of the legislation where it was stated that “it is no longer necessary for the state to establish proof of an offense beyond reasonable doubt before a person’s property may be confiscated. Mere unexplained wealth may, in certain circumstances trigger confiscation”.

Similarly, in Director of Public Prosecution (WA) v. Morris,193the respondent was stopped by the police, and a sum of AUD$108,390 was found. The DPP, by an ex parte notice, made an application for a freezing order with respect to the money and an application for an unexplained wealth declaration. The respondent applied to set aside the freezing order and objected to the automatic confiscation of his property. Prior to the hearing, the respondent submitted an affidavit tendering evidence that he had a quantity of lawfully acquired wealth. Because there are so few defended applications for unexplained wealth, the court relied on the explanatory memorandum of the Criminal Property Confiscation Bill and the second reading of the Bill, which held that:

the most significant of these proposed reforms is the confiscation of unexplained wealth as provided by part 3 of the Bill. These provisions target those people who apparently live beyond their legitimate means of support.…More importantly it is not relevant whether or not the person has committed any offense. The clear intention of the bill is to deprive people of wealth which has been unlawfully acquired. In this regard, the bill requires a person to establish that the ultimate source of his or her wealth was lawful.

190Williamson v. Ah On (1926) 39 LR 95 at 113–114. 191DPP v. Dung [2006] WADC. 192Permanent Trustee Co LTD v. The State of Western Australia, [2002] WASC 22. 193Director of Public Prosecution v. Morris [2010] WADC 148(District Court).



Reversed burden of proof was also upheld in Director of Public Prosecution (WA) v. Gypsy Jokers Motorcycle Club Inc.194where the court held that any person who has acquired substantial wealth by legitimate means ought reasonably to be expected to prove on balance of probabilities the source of his or her wealth.

Although the Act does not specify the type of proof required to satisfy the courts that the property subject to a UWO application, the two cases on UWO (Morris and Deng) show that courts are prone to accept as admissible evidence witness statements and any other related documents that will justify the origin of property if direct transaction records are not available. In Morris, the respondent was able to produce sufficient evidence through witnesses to satisfy the court, on balance of probabilities, that it was more likely than not that his property was derived from lawful sources. Subsequently, the court did not make a declaration for unexplained wealth. Conversely, in Deng, the respondent’s failure to disclose the names of witnesses and to tender evidence to justify the origin of the frozen property resulted in its subsequent forfeiture.

Most of the existing case law under the CPCA (2000) in WA comes from court decisions concerning cases instituted under the Criminal Benefit Declarations (CBD). Although these cases are not directly related to unexplained wealth provisions, the study team ascertained from their review the approach courts have taken to interpreting and applying CPCA provisions. In addition, general provisions related to freezing orders, scope of the powers of the court, and reversed burden of proof apply for both forfeiture schemes under the CBD and the UWOs.

Although the courts have repeatedly recognized the sweeping nature of the legislation, they have in general upheld the provisions of the CPCA even though only one case challenging its constitutionality was brought to the courts. In DPP for WA v. Hafner195, the respondent challenged the constitutionality on the grounds that the law had an extra-territorial effect and as such violated Chapter III of the Constitution that vests the power to enact extra-territorial legislation with the Australian federal Parliament. The case was brought by the DPP for a CBD pursuant to Section 30 of the Act, following the conviction of the defendant for a drug offense under the Misuse of Drug Act 1981 (WA), and who was liable to be declared a drug trafficker. When a person is declared a drug trafficker pursuant to Section 32(A) of the Misuse of Drug Act, all of his or her property, whether owned or effectively controlled or given away at any time before the declaration was made, is liable for confiscation. Section 30 of the Act also enables the DPP to apply for a confiscation order for any property owned or effectively controlled by the defendant, regardless of whether the property is located in WA or elsewhere. The court upheld the constitutionality of the Act relying on the authority of the decision in Broken Hill South Ltd v. Deputy Commissioner of Taxation,196 where the court held that: “a state may legislate extra territorially if there is a connection between the subject matter of the legislation and the state. Once there is sufficient connection, it is for the legislature to decide how far it will go.” The legislation clearly intended for the WA CPCA to have an extra-territorial effect, and in the present case, there was a sufficient connection because the respondent was convicted of a serious offense and was declared a drug trafficker by the District Court of WA. This decision is also important because it presents an opinion on the admissibility of hearsay evidence in the court. Hearsay evidence is admissible evidence in court unless the respondent challenges the evidence submitted by the applicant. The respondent’s failure to object means that this evidence may be used as proof to the extent of whatever rational persuasive power it may have. The evidence so received is to be treated as if it were admissible evidence.

From a review of decisions by the courts of the state of WA and the High Court of Australia, although it must be noted that only one case under the CPCA was reviewed and decided by the High Court it can be concluded that the courts of WA interpret the provisions of the WA CPCA more narrowly, rigorously

194Director of Public Prosecution (WA) v. Gypsy Jokers Motorcycle Club Inc [2005] WASC 61. 195Director of Public Prosecution for Western Australia v. Hafner [2004] WASC 32. 196Broken Hill South Ltd v. Deputy Commissioner of Taxation, [NSW] (19370 56 CLR 337 at 375.



following the intent of the legislators expressed in the Act and the Second Reading of the Bill. For example, provisions in the WA CPCA stipulate that the courts must issue UWOs, CBDs, or freezing orders if requirements of the Act are to be met. On this matter, the High Court of Australia, in the only case brought before it under the CPCA, Mansfield v. DPP of WA197 construed the provisions of the statute more broadly, relying on the inherent power of the courts to exercise their judicial authority. The court held that the powers conferred to the court pursuant to Section 48 of the statute are permissive and not mandatory which means that the court has the discretionary power to decide whether to issue a freezing order or not and is not compelled by the statute to issue such an order. In making its decision, the court relied on the arguments in Bennett & Co v. Director of Public Prosecutions (WA)198 where the court held that it was not the intent of the legislature to compel the court to issue an order merely on the advice of the DPP and that an application for an examination order might be sought. The court will decide whether to issue such an order by considering whether or not the application was based on reasonable grounds and if it was a bona fide application.

The Bennet case was an appeal brought by the respondent challenging the decision of the Supreme Court of WA, Appellate Division, on two grounds: (i) that the Appellate Court found that under the WA CPCA, the DPP was not required to make any undertakings as to the damages caused by the freezing order; and (ii) the court erred in denying the power of the Supreme Court in a freezing order to allow for a payment of reasonable legal costs for the defense of related civil or criminal proceedings. The court upheld both appeals and held that the Supreme Court has been conferred the power, by Section 45 of the WA CPCA to issue varying orders in regard to the frozen property and to attach conditions or require the provisions of undertakings to diminish the possibility of oppression and injustice. The debate concentrated on the scope of the powers of the Supreme Court conferred by the WA CPCA, citing remarks of Gaudron J in Knight v. FP Special Assets Ltd:,199

…[A] grant of power should be construed in accordance with ordinary principles and thus the words used should be given their full meaning unless there is something to indicate the contrary. Powers conferred on a court are powers which must be exercised judicially and in accordance with legal principle. The necessity for the power to be exercised judicially tends in favor of the most liberal construction, for it denies the validity of considerations which might limit a grant of power to some different body, including for example, that the power might be exercised arbitrarily or capriciously or to work oppression or abuse.

With this decision, the court set a higher standard of proof for the prosecution, specifying the burden of proof the DPP must meet to be granted a freezing order. Similar contentions were made in DPP v. Gypsy Jokers Motorcycle Club Inc.,200 stating that the WA CPCA does not intend to prevent the court from exercising its powers in dealing with potential abuses of its processes.

The appellant sought relief requiring the DPP to provide an undertaking as to damages as a condition for the continuation of the freezing order and to release funds to fund his defense proceedings. The release of funds was refused by the Court of Appeal on the grounds that there was no power under the statute to allow release of funds for that purpose. The appeal brought by the respondent was allowed on the grounds that the WA CPCA is draconian in its operation and complex in several of its provisions and therefore there is no implicit denial of the powers of the Supreme Court to issue any order under the Act. The court, in reviewing the general impact of the WA CPCA held that the release of funds for the payment of legal expenses not only assists the respondent but also improves the efficiency of the Act.

197Mansfield v. DPP for WA, [2006] HCA 38 (2006). 198Bennett & Co v. Director of Public Prosecutions (WA), [2005] A Crim R 279. 199Gaudron J in Knight v. FP Special Assets Ltd, [1992] 174 CLR at 205. 200DPP (WA) v. Gypsy Jokers Motorcycle Club Inc., [2005] WASC 61.



Conversely, from the decision of the High Court, the Supreme Court of WA, in DPP (WA) v. Mansfield,201 decided that the Act did not grant powers to the court to vary a freezing order to allow for the release of funds to cover legal expenses. In its reasoning, the court relied on the Second Reading Speech of Mr. Barron-Sullivan, in which he stated: “…property frozen under a freezing order can be released by a court only for payment of living or business expenses. No frozen property can be released for payment of legal expenses”. Similarly, in regard to the undertaking as to damages, the court held that it was the intent of the legislators not to confer powers on the court to impose the giving of an undertaking as to damages.

The Supreme Court of WA, the Final Court of Appeal took under review whether or not payment of a mortgage could be categorized as a reasonable living cost and what constitutes a criminal benefit under Section 16 of the Act in Mansfield v. Director of Public Prosecution & Anor.202The first instance court refused the respondent’s request to release frozen funds to allow for the mortgage payment for the property, which also was subject to a freezing order. On appeal, the higher court reversed the decision of the first instance court holding that there is nothing in the WA CPCA that prevents the court from regarding mortgage payments as reasonable living expenses. In this case, the WA Supreme Court also considered the construction of the WA CPCA regarding the making of CBDs and what constitutes criminal benefit for the purpose of the Act. The state construed the WA Act in a way that CBD should encompass the entirety of the proceeds of the sale of the shares (traded with inside information, including the value of the shares themselves). The court disagreed with the state, holding that it doubted that the legislature intended to confiscate or take away the entirety of the property, including part of the property that was lawfully acquired. The court, relying on the explanatory memorandum of the Bill, which stated that the WA Act is aimed at removing ill-gotten gains and that Section 16 is directed to wealth acquired as a result of the crime, interpreted that the intent of the legislators was to ensure that criminals did not benefit from their criminal activities and not to impose penalties over and above those that might be imposed in a court of criminal jurisdiction. Therefore, the court specified that a CBD would cover only the actual benefits derived from the commission of the offense and not the net profits specifying that the assessed value of the benefit should be not more than what was acquired.

In DPP (WA) v. Gypsy Jokers Motorcycle Club Inc. (an application for CBD), the prosecution refused to disclose one of the affidavits to the respondent, relying on Section70 of the Act (Secrecy Requirements) that imposes an obligation on a person not to disclose to anyone except, as permitted, information related to an application. Although the court accepted that there might be a situation in which disclosure of information might not be in the public interest it rejected the prosecutors’ contentions relying on the decision in Re Smith; Ex part e Director of Public Prosecution for Western Australia,203 which held that there was nothing in Section 70 of the WA Act prohibiting the disclosure of evidence filed in support of an application for a freezing order and there was nothing in this affidavit that would justify its non-disclosure. This decision is also important because it affirms the absence of a requirement to establish a nexus between an offense and the property subject to an application. The court held that Section 43(8) enables the state to issue a freezing order over specific property if there are reasonable grounds to suspect that the property has been used in, or derived from, an offense punishable by at least two years of imprisonment; however, Section 106 makes it unnecessary to link it to a specific offense. For the purpose of issuing a freezing order it is sufficient to show that any confiscable offense was committed.

The DPP’s contention that the respondent can seek leave of appeal, but that no appeal can be brought against an interlocutory order or a judgment without the leave of the judge or the Court of Appeal, was dismissed by the court. Judge Templeman held that if there was no right for appeal when dealing with

201DPP (WA v. Mansfield), [2005] WASC 79. 202Mansfield v. Director of Public Prosecution &Anor, [2007] WASCA 39.

203Re Smith; Ex parte Director of Public Prosecution for Western Australia, (No. 1) [2004] WASC 145.



freezing orders. The court would be acting in an administrative capacity and the legislative intent of the Parliament could not have been to undermine the judicial role of the court.

Finally, in Director of Public Prosecutions for Western Australia v. Bridge & Ors,204 the court dealt with the issues of retroactivity of the WA Act whereby the respondent challenged a criminal benefit declaration on the grounds that the offense is not an offense because it was committed before the Act came into effect. The court dismissed the respondent’s contention and held that the WA PoCA clearly stipulates that a person has acquired criminal benefit whether or not the property was acquired or the confiscation offense was committed before or after the Act came into effect.

204Director of Public Prosecutions for Western Australia v. Bridge & Ors, [2005] WASC 36.


Country Focus –Australia/Conclusions 121

Australia Conclusions

At the core of the UWO provisions of the Commonwealth PoCA 2010 is the reversal of the burden of proof to the respondent to justify that his or her wealth was acquired by lawful means and is not the proceeds of any illegal activity. The second element is the lack of requirement for the state to show that an offense has been committed or that the property owner is suspected of having committed an offense. However, the Commonwealth UWOs impose a requirement on the state to show that an offense was committed when a restraining order is sought. Any person can be the subject of UWO proceedings if there are reasonable grounds to suspect that he or she owns or possesses wealth that is not lawful. This approach expands the concept of attacking the proceeds of crime in that it attacks any property that is not acquired lawfully, whether it was acquired through a commission of one offense or a series of offenses, what type of offense was committed, and over what time period. The burden of proof on the prosecution is lower, because it must show only that a person has a lifestyle beyond his or her means. This is sufficient to satisfy the court to direct a person to produce evidence and establish the lawful origin of the property. The prosecution is not required to show that any offense was committed, further easing the burden on the prosecution in initiating proceedings.

Although UWOs were introduced for the first time as an innovative and powerful tool against crime in WA, we can conclude that their impact on fighting crime is moderate with a rather small amount of assets recovered to the state. Automatic confiscation of the declared drug trafficker, limited forensic accounting resources, tensions between the DPP and the police and lack of sympathy from the courts toward the statute, were some of the factors that dissuaded from more frequent application of UWO. However, establishment of the Task Force at the federal level seems a concerted effort of the government to ensure effective and frequent use of powers under the Commonwealth PoCA. Thus it is important for future evaluations of the UWO to monitor the application and the use of the UWO at the federal level, by the U.S. and other countries contemplating introduction of UWO. Successes or failure of application of UWOs and their successful completion rate will indicate their effectiveness.


Country Focus –Ireland 122

3.2.2 Ireland Background

In Ireland, civil forfeiture laws reversing the burden of proof onto the respondent to justify lawful origin of property were introduced in two laws: the Proceeds of Crime Act (PoCA205) and the Criminal Asset Bureau (CAB) Act, both of 1996. PoCA sets out the legislative framework that enables the state to attack proceeds of crime while the CAB Act establishes the institutional framework to support its implementation. By enacting PoCA, Ireland become one of the first countries in Europe to adopt a civil forfeiture regime that reverses the burden of proof onto the respondent. At the time of enactment of the law, Irish academics pointed out that the legislation marked a new approach to crime, transitioning it from a reactive conviction-based confiscation of assets to a proactive crime control strategy.206 Although there was little opposition to the law when it was enacted, its broad nature has been recognized by academics, practitioners, and courts. The defense bar has gone so far as to label it “radical” and “Kafkaesque”.207 Prosecutors justified its enactment on the grounds that it was a necessary response to the serious threat that organized crime posed to society. The constitutionality of PoCA has been challenged on many grounds by respondents but to date it has been upheld by the courts.

Introduction of civil asset forfeiture, in itself, does not mark a new chapter in the Irish common law tradition. It has been a longstanding principle of common law that nemodat quod non habet i.e., a thief cannot convey a lawful title to stolen property nor can any person into whose hands it comes resist a claim by the true owner for its return. A number of seizure and forfeiture schemes existed through various Revenue and Customs Acts208 and other statutory regimes. More recent conviction-based confiscation schemes are found in the Misuse of Drug Act of 1997,209 which provides for the confiscation of property following conviction of a drug offense if it was established that it was related to the offense. In 1994, the Irish Parliament introduced the Criminal Justice Act210 which provides for a broader confiscation regime targeting proceeds of crime derived from commission of any offense, not only proceeds associated with drug-related offenses. However, the prerequisite for confiscation remained prior conviction of an offense. Under this regime, the standard for conviction of a person for commission of an offense is the criminal standard of proof—beyond reasonable doubt—the confiscation of assets is conducted in a subsequent civil proceeding with a lower standard of proof—balance of probabilities. The lower standard of proof was justified on the grounds that it was inherently difficult for the prosecution to prove a direct link between a specific offense and specific property derived from it. Forfeiture of property also was provided for under the Offenses against the State Act of 1985 which introduced a rapid confiscation scheme that granted authority to the Minister of Justice to issue an order freezing assets within a very short period of time if he or she had reasonable grounds to believe those assets belonged to an unlawful organization. There was no prerequisite requirement of the existence of a predicate offense. The minister was authorized to issue an order directing financial institutions to pay the money held in a related bank account to the Minister of Finance. In addition, the Act provided for reversal of the burden of proof, requiring the asset owner to demonstrate the legitimacy of his or her assets. According to many, key provisions of the PoCA of 1996 were modeled after the PoCA of 1985.

The PoCA of 1996 was enacted following two tragic events in Ireland. In summer 1996 two people, journalist Veronica Guerin and a detective of the An Garda Siochana (Irish police, hereinafter “Garda”)

205Proceeds of Crime Act (1996), available at: http://www.irishstatutebook.ie/1996/en/act/pub/0030/index.html. 206 Felix J. McKeena and Kate Egan,“Ireland: A multi-disciplinary approach to proceeds of crime,” In Civil Forfeiture of Criminal Property—Legal Measures for Targeting the Proceeds of Crime,” Simon N.M. Young, 2009. Published by Edward Elgar Publishing, Inc. (citing the work of Walsh and McCutcheon). 207 Counselor for the respondent in Gilligan, p.5. 208Revenue and Customs Act (NEED TO ADD HERE) 209Misuse of Drug Act of 1997, available at: http://www.irishstatutebook.ie/1977/en/act/pub/0012/sec0001.html 210Criminal Justice Act of 1994, available at http://www.irishstatutebook.ie/1994/en/act/pub/0015/index.html



Gerry McCabe211, were murdered, shocking and outraging the public. In addition, the crime rate over the previous ten years had spiked, and organized crime groups involved in drug trafficking had committed what were known as “gangland murders” to protect their markets. According to statistics introduced by the Deputy Commissioner of the Garda, between 1987 and 1995, recorded indictable crime had increased by 20 percent, and serious crime had increased by almost 50 percent.212 In this context, with the public outraged at the blatant and violent murdering of prominent figures and the drastic increase in the crime rate, it was relatively easy to introduce and gain popular support for tough-on-crime laws. It is reported that it took less than five weeks to draft and enact two laws that constitute the foundation of the civil forfeiture proceedings, PoCA and CAB Acts. It is relevant that there was no major legal opposition to PoCA, either from the private bar or civil liberties organizations. However, a number of academics expressed dissent, holding that PoCA was draconian because it infringed on the fundamental and procedural rights of respondents.

Law enforcement proponents argued that it was necessary to introduce non-conviction–based asset forfeiture because the conviction-based confiscation regimes were yielding poor results. In fact by the time of the enactment of PoCA no post-conviction confiscation order has been made or ever applied for. The laws in place required that a person be prosecuted and convicted of an offense to justify confiscation of proceeds and benefits derived from illegal activities. Members of serious and organized crime groups, especially their leaders, were becoming increasingly skilled in distancing themselves from the actual crimes. Their foot soldiers were caught and convicted, while they remained safe and out of reach of the legal system. Further, law enforcement agencies claimed that the existing law adversely affected society as a whole. The fact that very few criminals were caught and indicted served as an enticement to others to engage in criminal activities while disappointed and disillusioned citizens lost their trust in the justice system discouraging them from cooperating with law enforcement. At the same time the principals of criminal organizations assembled wealth and commanded respect which motivated others to engage in unlawful activities. Therefore, PoCA and the activities of the CAB were designed specifically to enable the state to identify and target indirectly the economic base of the principals of criminal organizations so that they no longer would be able to benefit freely from their unlawful activities.213

Note that not long before the law was enacted, there was a general consensus that Ireland had no need to introduce civil asset forfeiture and that the conviction-based confiscation fit the country’s needs, despite its lack of results. This popular belief was further supported by the Law Reform Commission of Ireland in 1991, which, after considering the possibility of introducing civil asset forfeiture, concluded that conviction-based asset forfeiture was sufficient and corresponded to the circumstances in the country.214 Thus, it could be stated that the public outrage in response to the Veronica Guerin and Gerry McCabe murders shifted the general approach to fighting crime and increased support for enactment of tough-on-crime laws.

Since its enactment in 1996, PoCA has been labeled a radical and disproportionate response to crime by the respondents and their attorneys, and has been challenged on the grounds that it is a de facto criminal law, thus violating basic constitutional principles and depriving respondents of the protections guaranteed by criminal law and the constitution. One of the defense attorneys in Gilligan stated that the Act “carves out uncharted terrain…at a great cost to civil liberties and constitutional rights, and seeks to transplant the draconian legislation of emergency powers into a different set of legal relationships”.215Although the courts have recognized repeatedly the broad nature of PoCA and the impact it has had on fundamental civil rights, they have upheld the Act as constitutional and as a balanced measure to address crime. PoCA

211 Gerry McCabe, detective of the Garda Siochana, was murdered June 6, 1996; Veronica Guerin, investigative reporter with the Sunday Independent in Dublin, was killed June 26, 1996. 212 Statement of Deputy Commissioner Conroy in Gilligan v. Criminal Asset Bureau, [1997] IEHC 106 (HC), p.9. 213 Ibid. at 4. 214The Law Reform Commission, “The Confiscation of the Proceeds of Crime” Ireland, 1991. 215Gilligan v. CAB, [1997] 1 IR 526 (HC).



has, to date, survived many constitutional challenges, and continues to be implemented successfully. It also has served as a model for many other countries in designing and drafting forfeiture regimes.216 The Council of Europe Group for Evaluation of Corruption (GRECO)217 concluded in its annual report that Ireland had a solid legislative framework with regard to the proceeds of crime. It said, in regard to the civil forfeiture scheme, that it “was impressed by the civil forfeiture scheme which has provided the Criminal Asset Bureau with effective tools to identify and seize proceeds of crime.” In addition, the CAB, the agency established to implement the PoCA, played a major role in leading the development of the Camden Asset Recovery Inter-agency Network (CARIN218). The CAB held the presidency of the CARIN network for several years and assisted in developing its professional and administrative capabilities.

In addition to the events of the summer of 1996, asset forfeiture and confiscation regimes in Ireland have evolved as a result of international conventions and treaties, such as the United Nations Conventions against Illicit Traffic in Narcotics Drugs and Psychotropic Substances, the Basel Statement of Principles, the Financial Action Task Force (FATF), the Strasbourg Convention on money laundering (the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime), and the UN Convention against Transnational Organized Crime (2000) For the past 14 years, the length of time the law has been in existence, it has been considered moderately to very successful and there is a general consensus that it has had an impact on reducing and deterring crime. Representatives of CAB believe that during the first five years of the PoCA’s implementation, many individuals involved in unlawful activities moved their activities to other regions outside of Ireland, thus significantly reducing crime rates in Ireland.

Before discussing the PoCA in detail, it is useful to examine the Criminal Justice Act (CJA) passed two years before PoCA, which provides for conviction-based confiscation. It is relevant because the Irish legal system incorporates the principle that always favors or prioritizes conviction-based confiscation over civil forfeiture. A civil forfeiture proceeding would be instituted against a person only if there was insufficient evidence to prosecute that person. If, during the investigation, more information became available and a prosecution could be initiated, civil forfeiture proceedings would cease and all the materials would be passed to the prosecutor. All investigations, for both civil and criminal proceedings, are carried out by the Irish police and the CAB.

Conviction based forfeiture

Conviction based forfeiture is governed by the CJA, providing for forfeiture of proceeds derived from drug-trafficking offenses and terrorism (Sections 4 and 8B) and all other offenses (Section 9). The CJA allows for both direct and indirect forfeiture of the proceeds of crime; that is, assets can be directly removed from the defendants or indirectly removed if assets or benefits are transferred to a third party to avoid seizure and confiscation. The court in such a case can consider it a money-laundering offense and order forfeiture. Asset forfeiture following conviction is conducted as part of the sentencing process by the trial judge. A lower standard of proof applies—balance of probabilities. Application of the lower standard of proof is justified by the difficulty of establishing the link between the offense and the proceeds because of the way the crimes are committed and the steps often taken by the convicted persons to conceal the proceeds of crime.

The Director of Public Prosecutions (DPP) applies to the High Court with a request to investigate whether or not the defendant has gained any benefit from the crime of which he has been convicted. If the court is

216 CAB annual reports identify numerous countries that have visited the CAB to familiarize themselves with the workings of the Act. Other countries include Australia, countries in Africa, and others. 217 Groups of States Against Corruption, “Second Evaluation Round, Evaluation Report on Ireland,” 2005. 218 CARIN was initiated in 2002 and officially launched in Hague in September. The aim of CARIN is to enhance the effectiveness of efforts in depriving criminals of their illicit profits, with particular reference to financial deprivation. Europol is the secretariat of the CARIN network.

Comparati

Country Fo

satisfied, confiscatiIn fact thethe proseca monetarenquiry aoffense ofconvict wtraffickingother offecriminal oor not it isor she faiten years If a conviany prope

The defenproperty restraininglaw does discretion

Proceeds o

Just as thconvictionconsidereset out insuspectedas to dimiIrish PoCeffect. Secnexus beti.e., there what in Ireasonablpossesses proceeds proceedincertain srespondensought to of 1996 Australianproceedin

To gain aAct.220 Thand Socia

219 220 Criminal

ve Analysis of

ocus –Ireland

based on the ion order. A ge court assesscution. The Ory sum. If theas to the benef which he ha

within six yearg. This is a reense the confioffense. The ls appropriate ls to make thwhich if impoct refuses to p

erty that can b

ndant’s assetswill be avaig order can bnot impose a

n of the court

of Crime Act 1

he CJA formen forfeiture od the most swn the preambd of being theinish their cap

CA unique. Fcond, the stattween a specis no predica

Ireland is kne grounds to property tha

of crime, is ngs. And, finastage of thent to show thbe frozen undcontains somn UWOs, thengs under the

a full understhe CAB is a al Welfare, an

l Asset Bureau A

f Unexplained W

civil standardgreat deal of es the amoun

Order is statede defendant isefit of the Deas been convicrs from the daebuttable presiscation orderlegislative amto impose a c

he payment orosed must be pay the amoube located.

s and propertyilable if a c

be issued in anany statutory to make the f

1996

ed the basis of the proceeweeping effortble is defined proceeds of pacity to finanirst, it can bte is not requiific offense a

ate offense reqnown as “bel

suspect that at is directly admissible evally, the burde proceedinghe legitimacyder PoCA. Al

me of the feae UWO term Act are comm

anding of themultidisciplin

nd whose pri

Act (1996), avail

Wealth Orders

d of proof, thconfusion ha

nt of the benefd to be the equs convicted oefendant fromcted). There iay the proceesumption and r may cover o

mendments of confiscation ordered by theconsecutive t

unt of confisca

y can be restronfiscation onticipation ofrequirement

final decision.

of convictionds of crime it to attack thed to be “a mcrime.” As sunce future crie applied to ired to establiand the propequirement. Thlief evidencea person ownor indirectly

vidence in Poden of proof g shifts to y of the proplthough the Patures similais not used.

monly referre

e operation onary agency imary respons

lable at: http://ww

s

hat the defendas arisen by refit and then oruivalent of anf a drug traff

m drug traffics a statutory p

edings were incan be count

only the benef 1999 requireorder, no longe court, he or to the sentencation order th

rained (frozenorder is madf the convictis of proof to.

n-based forfeis set out in e proceeds of measure aimeuch, it aims timinal activitiany property

ish a erty, hird, ” or

ns or y the oCA at a the

perty PoCa ar to

The d to as procee

of the PoCA,whose membsibility is to

ww.irishstatuteb

Key

I

p

N

a

H

c

T

dant has gaineeason of the rders the convn order of theficking offenscking (not copresumption tnitiated againtered by evideefit derived fre that the trialger requiring a

she can be imce imposed inhere is power

n) pending a de following ion on an appo order freezi

iture in Irelathe PoCA ofcrime in Euro

ed at deprivito deprive wries. There arey acquired be

eds of crime.

it is also impbers are fromimplement th

book.ie/1996/en/

elements of

It is applied to

proceeds of cr

No need to sho

and the prope

Hearsay evide

court

The burden of

ed profit, the use of the wovicted person

e High Court se then the coonfined to ththat all prope

nst him are thence led by throm commissl court alwayan applicationmprisoned fon respect of thto appoint a r

criminal trialthe crimina

plication mading of proper

and, the founf 1996.219 Thope. The objeing the resporongdoers of e several elemefore or after

mportant to unm the Garda, he PoCA. Th

/act/pub/0031/in

Irish PoCA:

any property

rime

ow a nexus be

rty

nce is admissib

f proof shifts to

court may mord “confisca

n to pay that sfor the paym

ourt embarks e benefit from

erty received bhe proceeds ofhe convict. Fosion of the sps consider whn by the DPP

or a period of he primary ofreceivership t

l to ensure thal convictionde by the DPPrty. It is left t

dation of thehis continues ective of the Aondent of protheir profit as

ments that makr PoCA came

nderstand the Revenue Ser

he CAB carrie

ndex.html.

constituting

tween an offe

ble evidence at

o the responde

125

make a ation.” sum to

ment of on an m the by the f drug or any pecific hether . If he

f up to ffense. to sell

hat the . The

P. The to the

e non-to be

Act as operty s well ke the e into

CAB rvices, es out

nse

t

ent



investigations of the suspected proceeds of crime and works closely with the Irish police as well as with the aforementioned Revenue Services and Social Welfare Ministry. The head of CAB, known as the Chief Bureau Officer, comes from the Irish police and must hold the rank of Chief Superintendent; the Bureau Legal Officer is appointed by the Minister of Justice, Equality, and Law Reform. Revenue Service staff are appointed by the Revenue Commissioner, and Social Welfare officers are appointed by the Minister for Social Community and Family Affairs. Members of the CAB continue to perform the duties of and remain employees of their originating offices while also performing their tasks as members of CAB. However, they must exercise their powers and functions under the direction and control of the Chief Bureau Officer. They bring to CAB the powers of and access to the body of information of their respective agencies; for example, the police have access to the police databases and the revenue officers have full access to tax records and they use their respective information for CAB needs. Further, each has the power of the other when working together, e.g., the Social Welfare officer would have the full arrest authority of the Garda officer. The concentration and assemblage of all of these powers and information at the CAB has made it a powerful and effective institution in dealing with crime. It has been repeatedly stated that the CAB has played a key role in the success of PoCA.

The preamble of the CAB Act defines its objective “to identify assets, wherever situated, or persons who derive or are suspected to derive, directly or indirectly, from criminal conduct, to take appropriate action to deprive those persons of such assets in whole or in part and to carry out any investigation or preparatory work in relation to any proceedings under the Act.”221 The CAB Act provides that all CAB officers operate under anonymity,222 except for the Chief Bureau Officer and the Bureau’s Legal Officer and that all measures should be taken to not reveal the identity of the officers. Even in situations when an officer of the CAB is exercising his or her duties under the Act, he or she will not disclose his or her identity but will be accompanied by a member of the police. In addition, whenever a task is performed in writing documentation is signed on behalf of the CAB.

As part of the legislative package Parliament enacted the Disclosure of Certain Information for Taxation and Other Purposes Act in 1996, which, among others, enabled the Revenue Services to share internal tax information with CAB officers.

The PoCA and CAB Acts contain definitions of key concepts that clarify the objectives of the Acts as well as interpret the intent of the legislature. The “proceeds of crime” under the PoCA is defined to “include any property obtained or received at any time, whether before or after the passing of the legislation, by or as a result of or in connection with criminal conduct.”223 This is linked to the concept of criminal conduct, which is defined to include any offense that has taken place inside the state, or any offense that would constitute an offense if it occurred in the state, or an offense against the law of that state or if the property resulting from that offense is situated within the state. The inclusion of proceeds from offenses committed outside the jurisdiction of the court was rejected by the Irish courts which stated that there was no legislative intent expressed in the PoCA to target proceeds derived from offenses in other states. However, the PoCA was amended in 2005 to include the proceeds of foreign offenses that were held at any time in Ireland.

Another important concept in the PoCA is the mandatory requirement to identify a person who is in control or possession of property. However, proceedings under the PoCA are considered in rem proceedings instituted against property and not in personam proceedings. The process under the act was designed to ensure a legitimus contradictor as well as to identify for the public in suitable cases the person being deprived of the benefits of his criminal conduct. This issue was challenged by a respondent, who argued that the PoCA was a sanction and a penalty. The Supreme Court dismissed the argument and

221 Ibid., s. 4. 222 Ibid., s. 10. 223 Proceeds of Crime Act (amendment) of 2005, Part 2, Section 3.a, available at: http://www.irishstatutebook.ie/2005/en/act/pub/0001/print.html, accessed April 3, 2011.



held that forfeiture proceedings operate in rem because there is no threat of imprisonment or conviction when these measures are imposed.

The amendment of 2005 was important in remedying a number of deficiencies of the original PoCA. For example, it enabled the CAB to bring cases in the corporate name as an alternative to the personal name of the Garda Chief Superintendent or an authorized Revenue Officer. The amendment of 2005 also provided for a consensual disposition of assets before the expiration of a seven-year period224 pursuant to a Section 3 order. In addition, it introduced provisions that enabled the CAB to institute proceedings for damages against persons or companies enriched by corrupt conduct.

Proceedings Under PoCA

Freezing Order The first stage of the asset forfeiture in civil proceedings is an interim order, which is considered one of the most difficult stages for the applicant. It is governed by Section 2 of the PoCA. However, application may be made by Garda Bureau Officer to a District Court for a search warrant of a place or a production order sought in relation to a solicitor or a financial institution. A Chief Bureau Officer can make an interim order application to the High Court on an ex parte basis. Given the 2005 amendments to the PoCA, applications no longer are brought in the name of the Chief Bureau Officer but rather in the name of the CAB. The applicant bears the initial evidentiary burden of proof and must show by the civil standard of proof—balance of probabilities – the following: (i) that a person is in possession or control of property, (ii) that that property constitutes directly or indirectly the proceeds of crime, and (iii) that its value is greater than £10,000 or €13,000 ($18,000). The applicant files an affidavit stating the requisite belief and the court may ask him to state his belief in oral evidence. If the court is satisfied that there are reasonable grounds to believe that the property in question is the proceeds of crime it will issue an interim order prohibiting the person named as the respondent, and any other person having notice of the making of the order from disposing of or otherwise dealing with all, or if appropriate, a specified part of the property or from diminishing its value during a period of 21 days from the date the order was issued. The interim order will notify parties, or any other person who may be affected by it, of the freezing of property for a period of 21 days, as well as any other conditions or restrictions considered necessary.

To prevent abuse of power and the commission of serious injustice, each phase of the PoCA contains safeguards prohibiting the court from issuing any order to freeze assets when there is a possibility for “serious risk of injustice”, and enables the respondent or any other person claiming ownership of the property to seek a varying or discharging order. The court will issue a discharging order if the respondent is successful in proving that the property subject to the order is not the proceeds of crime or that its value is less than €13,000. The interim order lapses 21 days from the issuance date unless an application for an interlocutory order is brought by the CAB during that period. The Supreme Court, in McKv. F and other225, held that the application must be brought within 21 days, but it does not have to be actually heard in courts during that period.

In addition an essential safeguard is contained in Section 16 of the PoCA whereby if an interim or an interlocutory order is improperly made; the Court can order the stat to pay compensation. To date no such order has been made

224 Pursuant to Section 3 of the PoCA, the interlocutory order has to be in effect for 7 years, before an applicant can make an application for a disposal order pursuant to Section 4 225McK v F and another, [2005] IESC 5 (SC)

C

C

Comparative Analy

Country Focus –Ire

ysis of Unexplained

eland

d Wealth Orders

128


Country Focus –Ireland/Evaluating the Effectiveness 129

Interlocutory-Restraining Order The second phase is the interlocutory order for which the same conditions apply as for an interim order. The applicant is required to tender evidence to the High Court that a person owns or controls property, that the property constitutes the proceeds of crime and that the property value exceeds £10,000 (€13,000). If the court is satisfied that there are reasonable grounds to believe that the property is proceeds of crime as defined it grants an interlocutory order unless the respondent provides evidence proving that the property does not constitute the proceeds of crime or is of lesser value than as required by the PoCA. It also is provided that the court shall not issue the order if it is satisfied that there would be a risk of serious injustice. At any time during an application for a Section 2 or Section 3 order, the court may issue an order, pursuant to Section 9, compelling the respondent to file an affidavit with the High Court specifying the source of the property and any income acquired during the previous ten years (later limited to six years) from the day the proceedings were initiated.

The interlocutory order remains in place until: (1) an application for a disposal order is made; (2) the time has expired for bringing an appeal from that determination; or (3) an appeal is brought and is determined or the appeal is abandoned. Otherwise, the interlocutory order remains in effect for seven years before an applicant can make an application for a disposal order pursuant to Section 4. Under the amendments of 2005, the interlocutory order also can expire before seven years if the parties agree to dispose of the property at an earlier stage, but not earlier than four years. Given that the seven-year requirement is one of the major difficulties CAB officers face, work is in process to propose an amendment to this section to reduce the period of seven years to a more reasonable timeframe.

The Irish Supreme Court, in McK (F) v. F (A),226 held that the name “interlocutory order” caused confusion, creating an impression that it was a provisional intermediary measure aimed at maintaining the just equilibrium between parties until their rights were substantively determined, implying that the court would determine the substantive issues as soon as reasonably possible, and that at a later stage the entire substance of the material could be reopened. The court went further to say that, while it is true that the court is empowered to issue an order of the type of the Mareva injunction227, it is designed to restrain and freeze property without disposing of it. The court outlined five reasons the interlocutory order of Section 3 of the PoCA that did not have the traditional meaning of an interlocutory injunction. First, it is a free-standing substantive remedy imposing a complete embargo on any dealing with property. Second, it is not ancillary to an order to be issued under Section 4. Third, the substantive allegation is that the subject property represents the proceeds of crime and the court must be satisfied of this essential fact at the time it issues an interlocutory order. Fourth, an order is in force indefinitely unless applicants apply for it to be discharged or varied. Finally, given the length of time it must be in effect it is impossible to regard it as interlocutory in the traditional sense. The court held that this was a substantive remedy and not an ancillary order to a Section 4 order. The court also held that it is a final order that completed the Section 3 proceeding. In another case, Mckv. F and another,228the court clarified that the purpose of the Section 3 order was to freeze the property, not to deprive the owner of it.

As a safeguard, the Irish PoCA empowers the respondent or any other third person claiming ownership of the property or the respondent’s dependents to apply to the High Court to discharge or vary the interlocutory order. If satisfactory evidence is tendered to the court, it may discharge or vary the order as appropriate.

At any time after the court has issued an interim order or interlocutory order the court may, on application by the applicant pursuant to Section 7 of the Act, appoint a receiver giving him or her powers to possess the property and in accordance with the court’s decision to manage, keep possession, or dispose of the property. This was done to avoid potential problems arising from the issuing of an interim or interlocutory

226McK (F) v. F (A), [2002] IESC 4 (SC). 227 Mareva injunction is a is a court order which freezes assets so that a respondent cannot dissipate their assets until a final disposition order is made. 228Mck v. F and another, [2005] IESC 5 (SC).



order and to prevent the owner from transferring the property to another jurisdiction dissipating or diminishing its value. The court may give the receiver powers as appropriate in individual cases including the power to take possession of the property to which the order relates and, according to the court’s direction, manage, possess, or dispose of or otherwise deal with the property. In the majority of cases, the duty of the receiver is assigned to CAB legal officers.

While an interim or interlocutory order is in force the court may make ancillary or varying orders with regard to the property subject to an order. The court may, on application by the respondent or any of his or her dependents, pursuant to Section 6, issue an order enabling the respondent to cover reasonable living expenses or incurred legal expenses from the restrained property. In addition, the court can issue an order enabling the respondent to carry on a business or a profession involving the restrained property. The applications of these provisions have led to difficulties in a number of cases which prompted the Irish Department of Justice to implement an ad hoc legal aid scheme for the respondents.

Disposal Order The final phase is the disposal order or forfeiture phase governed by Section 4 of the PoCA. The interim and interlocutory phases present a transition to the final confiscation of property which is materialized with the disposal order. For the court to issue a disposal order, the interlocutory order must be in place for no less than seven years, and, in accordance with the amendment of 2005, it can be completed earlier if there is consent of all parties concerned (Section 4a of the Act). The law provides two safeguards to protect the property and assets of innocent individuals: (1) the court must give an opportunity to every person claiming that he or she owns parts of the property and who tenders sufficient evidence to satisfy the court that the property should not be confiscated, and (2) the court has the discretion not to issue a disposal order if there is a risk of serious injustice. If the respondent cannot be located, the court may adjourn the hearing of an application for a disposal order for a period not exceeding two years or as the court considers reasonable. The final decision will deprive the respondent of his or her property and transfer the title to the Ministry of Finance or to the exchequer.

Section 8 of the Act contains provisions in relation to evidence and proceedings under PoCA and provides for the admissibility into evidence of the belief of a member of Garda or an authorized officer that the assets in possession or control of the respondent constitute proceeds of crime, provided that the court is satisfied that there are reasonable grounds for the belief. Section 8 provides that a statement made by an authorized officer shall be considered as evidence if the court is satisfied that the officer had reasonable grounds. Subsection 2 of Section 8 provides that the standard of proof required to determine any questions arising under the Act is the civil standard of proof—balance of probabilities. Courts have continually accepted hearsay evidence tendered by the CAB. Further, the PoCA specifies that hearings for an interim order are heard otherwise than in public, and that the respondent can request that any hearing be heard otherwise than in public or in camera. Similarly, the court may, if it considers it appropriate, prohibit publication of information under the proceeding, including information related to the application and the persons to whom the application relates.

Further, Section 9 on Disclosure of Information, can be invoked at any time during the application for a an Interim or a Restraining order, which de facto shifts the burden of proof to the respondent to justify the legitimacy of his or her property or assets. The applicant can apply to a court for a Section 9 order, requesting the respondent to file an affidavit with a court specifying: (1) the property of which the respondent is in possession or control, or (2) the income and the sources of the income during such a period (not exceeding ten years) ending on the date of the application for the order, as the court concerned may specify. This order compels the respondent to produce evidence and facts that satisfy the court that the property subject to any of the orders does not constitute the proceeds of crime. The constitutionality of Section 9has been challenged by respondents, but was upheld by the Supreme Court. Although the court recognized PoCA’s far reaching character, it went further to consider it an appropriate measure against the sophisticated methods of operation adopted by criminals.



Sections 10 through 14 of PoCA deal with matters such as the registration of interim and interlocutory orders, the situation where a respondent is bankrupt and the winding up of a company in possession or control of property subject to any of the orders. Section 15 empowers a member of Garda or a Customs and Excise Officer to seize property that is the subject of the order. Section 16 provides for the granting of compensation to a respondent or any third party with an interest in the property if an interim or interlocutory order was wrongfully issued. The party making an application for compensation must satisfy the court that he or she is the owner of the property (or part of the property) and that the property does not constitute proceeds of crime.

Under the amendments of 2005, a new remedy for corrupt enrichment was introduced, empowering the court to issue an order, on application by an authorized officer, directing the respondent suspected of committing a corruption offense to pay to the Minister of Finance or another entity an amount of money equivalent to the suspected value of the enriched corruption. The court will issue such an order if it is satisfied that the respondent has benefited from his or her position or has, by virtue of exercise of his or her position, benefited some other person and if he or she does not account satisfactorily for the source of his or her income and property. In such a case, the court will presume that the property is derived from a corrupt enrichment unless the contrary is established.

Investigations and Search

Unlike Australia and many other jurisdictions (e.g., Canada, New Zealand), Ireland does not have coercive investigative powers incorporated in the PoCA of 1996; but these powers are granted to the CAB. Section 14 of the CAB Act authorized it to search, seize, and detain any property if there are reasonable grounds to suspect that the property may constitute proceeds of crime. Pursuant to Section 14 of the Act, a district court judge, or in urgent cases, a bureau officer who is a member of Garda not below the rank of superintendent, may issue a warrant for the search of that place and any person found at that place on hearing evidence by police under oath and being satisfied that there are reasonable grounds to suspect that evidence related to assets or proceeds derived from criminal activities are to be found here. In addition, the officer also is authorized to retain any materials found at the place or in possession of a person found at that place which the officer believes to be evidence related to the assets in question. A search warrant expires after seven days from the moment it is issued. In addition, the CAB can issue examination and production orders requesting any person to respond to that order. According to CAB officers, monitoring orders have not been used so far although there is nothing in the legislation preventing their use. If any person fails to respect the order, or obstructs the officer in carrying out his professional duties, he or she can be fined or imprisoned for a period not exceeding six months or both. In addition, the CAB is authorized to arrest any person if they have reasonable cause to suspect that person is committing or has committed an offense under the Finance Act.

CAB officers conduct investigatory work on all civil confiscation cases. Cases are referred to them by the regular police. On completion of an investigation the results are submitted to the DPP which makes a determination based on the evidence whether or not to initiate a criminal proceeding. A decision to bring PoCA proceedings or tax action is a responsibility of the CAB.

An important feature of the 1996 PoCA is the authorization of the CAB to apply the powers of the Tax Act and the Ministry of Social Welfare, ensuring that the proceeds of criminal activity or suspected criminal activity are subject to tax and that the Revenue Acts are applied fully to such proceeds. The provisions of the Disclosure of Certain Information for Taxation and Other Purposes Act of 1996 have been used extensively in the exchange of information between the Revenue Commission and the CAB. The CAB has initiated financial investigations based on information received from the Revenue authorities and the Revenue authorities have used information resulting from financial investigations conducted by the CAB. The implementation of the tax action on suspected proceeds of crime was forecast to be an extremely effective weapon in the process of taking the benefit from crime. Tax action was usually the third option after criminal prosecution/confiscation and PoCA action. Taxation powers were



used in cases in which even under the PoCA proceedings were not successful. Some of the largest criminals were successfully targeted under the taxation powers229. Again on the social welfare side the public greatly appreciated the fresh approach in depriving obviously wealthy criminals of social welfare benefit which they were claiming wholesale.

3.2.2.1 Evaluating the Effectiveness of Ireland’s UWOs

Effectiveness of the Proceeds of Crime Act

After 14 years of implementation of the PoCA in Ireland, there are ample data on the cases instituted under it and the body of jurisprudence developed by the Irish courts. This section evaluates the impact of the PoCA and its effectiveness in combating organized crime in Ireland. Recognizing the difficulty of evaluating the effectiveness of the law in a precise way, the study team took a two-prong approach: (1) assess the effectiveness of the Act from the available statistics by reviewing the number of applications made under the Act, the number of successful applications that led to forfeiture, the number of decisions overturned by higher courts, and the total value of assets forfeited to the state. In addition (2), being aware of the difficulty in assessing the impact of the Act in fighting and preventing crime, the team interviewed people and agencies directly involved with the PoCA and the CAB Act who were well able to express informed opinions on the impact of the Act. In this regard, the team interviewed former and current representatives of the CAB, the DPP, defense bar, academics, and police and reviewed media coverage of activities of the CAB and cases brought under the PoCA.

All interviewees expressed certainty that the PoCA has had a significant impact on dismantling and disrupting criminal activities in Ireland. It is widely believed (and anecdotally reported) that during the first five years of implementation of the Act, those engaged in criminal activities experienced a significant setback, whereby many criminals and principals of criminal organizations were deprived of their illegal profits and properties. It is important to highlight that the success of the Act often is attributed to the CAB which played a major role in making the PoCA a success. The Irish approach to attacking proceeds of crime has served as a model for other countries; indeed, during the site-visit to Australia, the research team learned that the Australian federal government is using the Irish CAB as a model to design a multiagency task force to implement its PoCA. In addition, other countries—South Africa, United Kingdom, Seychelles, Bulgaria, and others—have used the Irish PoCA as a model to develop non-conviction based forfeiture legislation in their countries as an approach to attack proceeds derived from criminal conduct.

The initial strategy of the CAB was to target well-known criminals and the principals of criminal organizations who were engaged in criminal activities and had accumulated large amounts of property with no apparent legitimate sources of income. These were criminals who had been on the radar screen of law enforcement for a long time, but on whom there was insufficient evidence to lead to a criminal conviction. Early CAB actions led to seizure and restraining of sizable property considered to constitute proceeds of crime. The immediate success was ascribed to the fact that those engaged in criminal activities were not skilled and did not see a need to hide the proceeds of their criminal conduct. The only remedy available to the state before the PoCA was to confiscate proceeds deriving from a specific offense following conviction of the defendant for that offense. Because the principals of criminal gangs distanced themselves from criminal activities the risk of potential prosecution and confiscation was nonexistent. This situation enabled them to freely enjoy their illegally acquired wealth. This situation changed noticeably with introduction of the PoCA and the CAB Act. The subsequent response of criminal groups was to relocate their operations in neighboring countries (e.g., Holland, Spain). In its 2004 annual report, the CAB noted that there was an increasing trend of criminals moving large amounts of cash to other jurisdictions to avoid seizure. One of the academics interviewed230,although expressing dissatisfaction

229 Well known criminal Gerry Hutch alias “The Monk” was successfully targeted. 230 Interview: Dr. Colin King, University of Leeds (May 5th, 2011)



concerning the lack of an assessment of the impact of the PoCA on combating organized crime and its current focus on numbers, still stated that “it is safe to say that the establishment of CAB and the enactment of PoCA has had significant impact, particularly in driving many criminal figures out of Ireland, but there is also the issue of that vacuum being subsequently filled by other crime gangs, or indeed whether the criminals in exile are simply running their operations from the likes of Spain and Holland”.

The relocation of criminals to other countries has not had as much effect as initially contemplated because most of the criminals have maintained their illegal operations in Ireland, but at the same time are out of reach of the justice system. However, there are examples where the CAB has instituted proceedings for forfeiture of assets in Ireland in absence of a person. An example of such a case is M v. D, where a procedure was instituted against an alleged drug dealer to forfeit the person’s property in Ireland. The overall opinion is that the PoCA has had an impact on decreasing crime rates in Ireland and, in particular, on disrupting drug trafficking operations.

After the initial operations of targeting the principals of criminal organizations, partly because of the jurisdiction issue, the CAB shifted its strategy to pursuing small and middle ranking criminals. CAB adopted a strategy to pursue cases that have a large impact in community, regardless of the size and the value of the recovered property. They targeted drug dealers living easy lives, driving expensive cars without legitimate employment. In this regard the CAB forfeited numerous properties including high end vehicle owned by drug dealers. This approach according to the CAB has had a significant impact in the community as one of the interviewees stated “mothers would be able to point to their growing children and say that crime does not pay.”

Finally, the team heard that the significant impact the CAB had at the beginning is starting to diminish. Fourteen years of operation had led to successful disruption of criminal organizations and activities and there is less for the CAB to do. Also, criminals are becoming more skilled and better at concealing their operations and their proceeds through money-laundering activities. However, the conclusion of the team is that the PoCA has been effective in combating organized crime and to some degree acting as a deterrent to future engagement in criminal activities.

An advantage of assessing the statistical data of the PoCA is that all of the information on forfeiture of assets is collected and published by the CAB on annual basis and most of it is easily accessible.231 However, there are a number of problems related to data that make it difficult to give precise figures on monies forfeited to the state. One difficulty is that the information on monies recovered before 2001, when Ireland entered the Euro zone, replacing the Irish Punt with the Euro, makes it difficult to give an accurate overall figure of funds forfeited to the state over the past 14 years.232 Further, because most of the cases instituted by the CAB are settled, the available data are not disaggregated by number of cases settled versus those tried. Therefore, readers must bear in mind these limitations when reading the report.

The conclusion that was drawn from the information presented in Table 6 is that over the 14 years of PoCA implementation, the CAB has used the PoCA extensively to attack the proceeds of crime. From 1998 through 2009 (date of the last annual report), the CAB has made 107 applications for an interim order and 110 applications for an interlocutory order, which have resulted in 68 disposal orders. As shown by the numbers available, the CAB initiated each year an average of ten cases (except in 1999, when it made only one application for an interim order and three applications for interlocutory orders). The data

231 Note: CAB Annual Reports from 2002 to 2009 are available online. Annual Reports from 1998 to 2001 are not available online, data were collected during team’s trip to Ireland. 232 Because we do not have the exchange rate of the Irish Punt to the US dollar during those years, we converted all numbers from both Irish Punts and Euros to Dollars based on current rates. Thus, the numbers given for the earlier years are not to be considered as precise amounts forfeited to the state. The decision to use the conversion was made to give general and approximate numbers for the funds forfeited to the state.



show that out of 110 restraining orders, 68233 have led to successful forfeiture of assets to the state. It is important to note that one element that affects the CAB’s efficiency is that an interlocutory order must be in effect for seven years before the property can be forfeited to the state, unless the parties agree to dispose of it earlier, as provided for by the 2005 amendments of the PoCA. Therefore, there is not a direct correlation between the number of restraining orders and the number of disposal orders because the numbers of final dispositions include only the cases finally disposed. Also, the number of interlocutory orders includes cases that may have been disposed of through the tax powers as well as active cases (i.e., still on trial). Furthermore, in looking at the earlier years of the PoCA (1998–2003), no assets were forfeited to the state. The first forfeiture took place in 2004, seven years after the Act was implemented. Thus, there is a trend from 2004 onward that the number of disposal orders is higher than the number of interlocutory orders or even.

Table 6: Number of Applications Made Under the Proceeds of Crime Act

Total Number of Orders

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Interim Orders 7 1 5 4 12 11 10 10 7 16 24 17

Interlocutory Orders 6 3 7 13 7 6 10 11 9 8 14 16

Variation Orders NA 2 2 2

Disposal Order (S4) NA 2 13 3 3 2 7

Disposal Order (S4 A) 14 4 11 9

Receivership 2 6 12 7 9 15 13 8 11 25 20

2007

Total Forfeiture Orders 0 0 0 2 13 17 7 13 16

The total amount of assets forfeited to the state (converted to $US) since 2004, when the first forfeiture took place, is $15,744,100. On average, as shown in Table 7, each year the CAB forfeited from €1.5 million (approx. $US2M) to €3 million (approx. $US4M) to the state, with the largest amount of funds forfeited to the state in 2006 and the smallest amount in 2004. From the numbers of applications (Table 7), it can be concluded that CAB activities were consistent, with approximately the same number of applications being made each year (except for 1999).

One of the CAB’s most effective weapons is its tax powers, the ability to tax property derived from crime. The largest amounts of funds collected by the CAB are under its revenue powers. Since 1998 (period of 14 years), the CAB has forfeited to the state a total of US$160M.

233 The number of 68 orders include only number of the Proceeds of Crime orders made by the court. In this number are not included tax and social welfare orders that are also used to target proceeds of crime. The reason why these orders are not included is because such data do not exist, the only information available is the lump sum of monies recovered through these schemes.



Table 7: Amount of Funds Forfeited to the State from 1998 to 2009

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Disposal Order (S4) €0 €0 €0 €0 €0 €0 €276K €2,003K €685K €907K €785K €870K

Disposal Order (S4 A) €0 €0 €0 €0 €0 €0 €0 €0 €2,537K €528K €2,017K €393K

Total Forfeited €0 €0 €0 €0 €0 €0 €276 €2,003K €3,222K €1,435K €2,802K €1,263K

Recovered funds using the tax powers include tax and interest collected on income, capital gains, value added tax (VAT), and corporation tax. The largest amount collected is under the income tax, followed by the VAT and the corporate tax. It is important to note that a number of proceedings instituted under the PoCA could also have resulted in taxation of those proceeds in addition to forfeiture of the property, or, if unable to forfeit property, unpaid taxes would be collected. Smaller amounts of funds were recovered through the powers of social welfare, totaling about $9 million overall.

As noted in Table 6 and Table 7, monies recovered under the PoCA are not large. However, if they are looked at in combination with the money recovered from the tax powers available to the CAB, it substantially increases the total amount of funds forfeited to the state. On average as it can be seen from the Table 8, the CAB received €5-7 million. In 2007 for example, the CAB received from the state an annual budget of €5,1M (US$7.2M234) and they forfeited to the exchequer €10M (UA$ 14M), of which €1.4M (US$1.9M) were from the PoCA. However, it is important to note that there is not a direct correlation between the CAB’s budget and the funds recovered under the Proceeds of Crime Act, as the funds are used to investigate and pursue cases under revenue and social welfare powers attributed to the CAB. In general it could be concluded that the CAB has recovered substantially more assets than it has received from the Parliament, with largest amounts of funds are recovered from the revenue powers. Substantial amounts of tax, running to many millions of Euros, were paid in by individuals with a greater or lesser connection with crime voluntarily. This was perceived to have motivated the CAB’s involvement in targeting proceeds of crime through revenue provisions. And finally it is important to note that the success rate of the implementation of civil forfeiture to date is almost 100 percent, with two cases not leading to forfeiture.

234Conversion rate: €1=US $1,41, on July 12th, 2011



Table 8: Annual budget of the CAB and funds recovered235

Year CAB Annual Budget € US $

Forfeited to the Exchequer US$

2004 € 5,675,000 $8,014,746 N/A $0

2005 € 5,246,000 $7,408,873 € 18,500,000 $26,127,365

2006 € 5,205,000 $7,350,969 N/A $0

2007 € 5,108,688 $7,214,949 € 10,000,000 $14,122,900

2008 € 7,509,000 $10,604,886 € 12,000,000 $16,947,480

2009 € 6,877,000 $9,712,318 € 6,600,000 $9,321,114

As stated previously, the success of PoCA is attributed to the excellent multidisciplinary teams of the CAB, composed of members of Garda, Revenue Commissioners (including tax and customs officers), and employees of the Department of Social, Community and Family Affairs, who operate under the guidance of the Chief Bureau Officer (CBO) selected from the ranks of senior Garda. In addition, the CAB has a Legal Officer who reports directly to the CBO as well as administrative and technical staff who support CAB operations.

The CBO is appointed by the Commissioner of the Irish police; the CAB Legal Officer is appointed by the Minister for Justice, Equality and Law Reform, with the consent of the Attorney General. Similarly, representatives of the Revenue, Social Welfare, and Police are nominated by their respective organizations and appointed by the Ministry of Justice. There was a substantial effort made to attract and retain highly motivated, qualified, and skilled members for the CAB, using such incentives as danger pay and anonymity provisions to safeguard the identity of CAB members and their families.

What makes the CAB unique is that it brings together the powers of, and personnel from, three different agencies under the umbrella of an independent agency who work together to combat organized crime. That is, the members of the CAB—police, revenue, and social welfare officers—retain the powers and duties vested in them within their home agencies and also have the powers of their CAB colleagues, i.e., each is cross-deputized. Combining these resources, skills, and experience in one agency enables the CAB to attack the proceeds of crime from three different aspects, forfeiting property constituting proceeds of crime, taxing it, and denying social welfare payments to the respondents who own or control such property. In this regard, the CAB has access to the police database PULSE236 (containing comprehensive information on any individual on purchases, misdemeanor offenses, and other activities), tax, and customs and social welfare records, which enables the CAB to gather large and comprehensive amounts of information on any individual targeted by the CAB. The CAB’s access to such a large body and variety of information is considered one of its most formidable powers, and it is said that it creates an uneven playing field for respondents and their attorneys. In addition, when bringing a tax assessment application against a person the CAB, it is permitted by the statute not to share the sources of information with the respondent making it difficult for the respondent to challenge the allegations of the CAB and to discharge the burden of proof. However, the CAB’s reputation according to our interviewees is stellar, and it is considered a highly professional, skilled, and serious organization.

The CAB has a total staff of 60–80 employees that has been maintained for a number of years since the CAB was established, although the number of employees at the earlier days was around 40. Within the CAB are four teams, each of which includes Bureau’s investigation representatives from customs, the police, and tax and social welfare. Each team has a team leader, who usually is a member of the police. 235Funds received and recovered from 2004 to date. Only figures since 2004 have been selected since the first property under the PoCA was forfeited in in 2004, seven years after enactment of the PoCA. 236 Police Using Leading Systems Effectively (PULSE) is a database of the police force of the Republic of Ireland.



The CAB also engages highly skilled computer technicians and forensic accountants to assist with the case work and has trained asset profilers throughout the ranks of the Irish police who are the primary source of information for new cases. In addition, the CAB can draw on specific expertise when needed by calling lawyers, bankers, and other professionals. Resources, financial and human, did not seem to be an issue for the CAB.

The High Court appoints a judge to work on civil forfeiture cases for a period of at least two years, assisted by a special registrar. This is considered one of the major factors contributing to the high success rate of civil forfeiture proceedings. However, it is important to note that some cases have dragged on for a long time delaying confiscation indefinitely.

As stated previously, the CAB has a stellar reputation, and often, when problems arise in other areas outside the purview of the CAB, there are references made to engaging the Bureau to resolve arising problems, i.e., citizens ask, “Where is the CAB” even though the problem is outside of the area of its operation. In this regard, with the 2005 amendments to the PoCA, the CAB’s powers were extended to deal with politicians who profited from corruption (e.g., bribery for land rezoning, allocation of specific licenses to individuals or corporations). It is difficult to determine from the available statistics if any cases of corruption have been instituted to date.

The CAB worked hard to establish it reputation and continues to work hard to maintain it. There are several factors that play a part in this reputation. One, it selects highly skilled and committed team members. Two, it carefully screens and selects the cases it will pursue, scrutinizing each case against three criteria: (1) feasibility; (2) assets, and (3) criminality. That means that for the CAB to pursue a case there must be sufficient evidence to raise a reasonable suspicion that the person has been engaged in criminal activity. This does not impose a requirement of a predicate offense. It means only that there must be sufficient grounds to lead the CAB to believe that the person is engaged in criminal activity. The other two criteria are related to assets the person owns or possesses and the feasibility of the case. The first scrutiny of the case is performed by one of the teams and the team leader; the second filter is the team leader and the Bureau’s Legal Officer; and the third filter is the Chief Bureau Officer. The CBO makes the final decision on each case. This deliberate and careful selection of cases has had a positive impact on the efficiency of the CAB’s work as well as its reputation. This has resulted with more than 90% success rate of concluded cases. Only two decisions have been overturned by the Supreme Court.

Although the CAB has played a large part in making civil asset forfeiture a success, the PoCA itself also has merit. The law is well drafted and is broad enough that it vests sufficiently broad powers on the CAB that enable it to attack the proceeds of crime from many angles. The team was told that the way PoCA is structured there is not much what the Bureau could not do. Obviously, although this has been an advantage for the CAB, it has been considered abuse of power by the state237, as a result causing inequality of arms whereby the respondent must face a powerful organization with unlimited resources and access to any information available.

The strengths of the PoCA are: (i) it is a comprehensive forfeiture law that enables the CAB to forfeit proceeds derived from any criminal conduct; (ii) it does not have a requirement of a predicate offense, it is sufficient for the state to show that there are reasonable grounds to believe that the respondent has been engaged in unlawful activity; (iii) it reverses the burden of proof onto the respondent to show the legitimacy of his or her assets; and (iv) it provides for a discovery order, whereby a court can order the respondent to disclose any assets he or she owns or controls and their source.

In rem civil forfeiture is not new to Ireland, but civil forfeiture of proceeds of crime has introduced a new approach to attacking tainted property derived from criminal conduct. With the introduction of the PoCA, Ireland created comprehensive forfeiture legislation that enabled the state to forfeit property or assets constituting proceeds of crime derived from any type of offense. A large majority of civil asset forfeiture

237 Interview with Dara Robinson, Dublin, June 10th, 2011.



provisions in the U.S. are found in numerous laws and statutes and are subject of different rules. In Ireland, this has been resolved with an all-inclusive forfeiture scheme and creation of a statutory entity solely responsible for implementing the PoCA.

There is an ongoing debate whether the PoCA is an in rem or an in personam forfeiture scheme. The Act has a requirement that to commence any proceeding, a person who is in control or possession of property must be identified. An exception is provided when the owner cannot be identified or has absconded. In all other cases, applications for any of the orders can be brought against the person/property owner and any property that the person owns or controls if he or she cannot show that the property was lawfully obtained. However, the Irish courts have held that the proceedings are in rem because they target the property and not the person, so no action is taken against the person and no sanction is imposed. Further, the absence of a requirement to establish a nexus between an offense and the property leads to the conclusion that the PoCA targets criminal conduct of a person and the property related to criminal conduct. Thus, the CAB does not have to prove that specific funds were derived from a specific offense and were transferred or used in acquiring a specific property. It requires only that it be shown that a person has been engaged in criminal conduct and that he or she has lived beyond his lawful means. These two elements are the key elements that make a proceeding an in personam proceeding, as the Act is not construed to deal with instruments of crime and the proceeds derived from commission of a specific offense. The Act is construed more broadly to target the property of the person engaged in criminal conduct. Although the argument of the courts that this is not a sanction imposed against the person is true, it is nonetheless a measure that is imposed against an individual.

The reversal of the burden of proof onto the respondent is controversial and highly challenged around the world. Many other countries have contemplated introducing the reversal of the burden of proof onto the respondent, who is in the best position to justify the legitimacy of the property. However, because the controversy and the belief that it violates fundamental principles of human rights—presumption of innocence—many countries have withdrawn it, and the PoCA was often criticized by the European Union as too far reaching and radical. However, in reality and in practice, the reversal of the burden of proof is less controversial and not as harsh as it is thought to be. First, for the burden of proof to shift onto the respondent the state must meet its burden, known in Ireland as the evidentiary burden of proof.

As the team witnessed, both in Ireland and in Australia, the evidentiary burden of proof the state must meet has a higher threshold than that of the respondents. Whether this is a result of the work of the CAB or the Australian DPP, it is difficult to ascertain, but we have repeatedly heard that the courts have played an important role in raising the bar. The CAB is careful to prepare high-quality and convincing evidence for each case because CAB personnel know that the courts will judiciously scrutinizes and demand convincing and persuading evidence. The quality of the affidavits and the evidence put together by the CAB for each case is of exceptional quality. Members of the defense bar (barristers) recognized this, stating that although they had issues with the way the statute was construed regarding the powers of the CAB, the work of the CAB was highly professional.

An application for an interim order or an interlocutory order prepared by the CAB presents a comprehensive overview of the respondent’s lifestyle, presenting reasonable grounds to suspect that a person has been engaged in criminal conduct. These statements can be supported by the statements of the Chief Bureau Officer, police officers, and any other person. Further, the affidavits are supported by evidence prepared by forensic accountants on the basis of lifestyle analysis (income and expenditure), banks and other financial institution records, revenue records and social welfare, as well as criminal activity. All the evidence is presented to the court when an application is made. However, this is not sufficient to shift the burden of proof onto the respondent. During the hearing, the court must determine the credibility of the evidence according to the standard set by Justice McCracken in McK v. D,238 where it was held that Section 8of the Act envisages a two-stage process for evaluating the evidence; initially,

238McK v. D, [May 2004], Unreported case (transcript of hearing).



the court hears the evidence and invites the applicant as well as the respondent to cross-examine the witnesses, and then the judge determines the weight he or she will attach to the testimony. Only when a judge determines that the evidence is credible does the burden shift onto the respondent. Thus, the respondent is given an opportunity to cross-examine the witnesses and to challenge the allegations made by the CAB before he or she bears the burden to establish the legitimacy of the property subject to a proceeding. Thus, the state must meet a higher threshold of the burden of proof before it shifts the burden onto the respondent to rebut the state’s allegations. However, opponents of the reversed burden of proof hold that the state, with its powers and access to considerable resources, has far greater possibilities to present evidence against an individual who may lack the knowledge, information, and resources to counter the state’s allegations. On the other hand, the reversal of the burden of proof in a civil proceeding does not violate the presumption of innocence because no one is pronounced guilty, or tried for commission of a specific offense. This is a civil proceeding and the principles of the criminal law such as presumption of innocence are not applicable. Furthermore, in practice, the burden shifts onto the respondent only after the court is satisfied that the person has acquired property through illegal activities, regardless what those activities are or when they occurred.

Finally, one of the distinctive features that makes the PoCA unique is Section 9, or disclosure orders. This provision provides that a court, on an application by the CBO, can direct the respondent to disclose all properties and incomes that he or she owns or possesses, and their sources. The statute does not foresee any sanction if the respondent does not comply. However, the inherent powers of the court apply, whereby a person can be held in contempt of the court, or, if he or she provides false information, can be charged with an offense. The severe nature of the disclosure order, otherwise known as discovery, has been recognized by both the CAB and the courts. The CAB has rarely invoked this power, and only a few applications for a discovery order have been made. The courts have ruled that when a discovery order is made use of the information must be limited to civil forfeiture proceedings; it cannot be used to make criminal charges against a person. The DPP is required to give an under taking that the material will not be used in a criminal prosecution of the person in this regard.

Assets forfeited by the CAB are transferred to the Exchequer. Part of the funds can be used to cover the reasonable legal expenses of the respondent as well as to cover the receiver’s costs for managing and maintaining the property, as well as payments to other countries party to a proceeding or paying the victims of offenses. Unlike many state forfeiture programs in the U.S., none of the funds forfeited are transferred to the CAB because of a perceived conflict of interest.

The general sentiment of the public is that the CAB has not abused the powers available to it, and has always, with exceptions, targeted those known for their criminal activities. Our search of media reports found little criticism in regard to cases instituted by the CAB that have led to forfeiture of assets.

The PoCA legislation is perceived as being well construed but it does have flaws and the CAB has taken actions to amend it. First, the PoCA was amended in 2005 allowing for the forfeiture of proceeds deriving from crimes committed outside of Ireland. Although it was considered that this was provided for in the original Act, the court ruled that proceeds of foreign offenses could not be the subject of a proceeding in Ireland.

The second perceived weakness of the PoCA is the requirement for a restraining order to be in place for a period of seven years before the property can be forfeited. An attempt to remedy the situation was made in 2007, when the Act was amended to allow for forfeiture of property with mutual consent of the parties, before expiration of the seven-year period. However, problems continue. Having a property under a restraining order for a long period of time may result in possible depreciation and devaluation of the property and it also requires resources and assets to be monitored and managed. In particular, property under a restraining order may continue being used by the respondent or his or her dependents. In addition, the global financial crisis has depreciated the value of non-fungible property under restraining orders. Therefore, the CAB is in the process of preparing a draft proposal to reduce the time period required for



an interlocutory order to be in effect from seven years to two years, and to maintain the provision that provides for disposition of property with the parties’ consent.

The CAB identified an issue that requires attention: its ability or lack of ability to dispose of property while the interlocutory order is in effect. That is, maintaining and controlling the property often has become strenuous and expensive for the CAB because resources are used to maintain a property that may not be worth it. Thus, the CAB seeks to amend the Act and incorporate a provision that enables the CAB to dispose of certain properties and deposit funds in an account until final disposition of the case.

An impediment the CAB faced at the onset was coordination and access to tax records. The revenue code limited the use of tax records for purposes of tax administration, preventing revenue officers from sharing them with CAB officers. However, the situation was remedied with the Disclosure of Certain Information for Taxation and Other Purposes Act in 1996, which amended the code to facilitate the assessment and collection of taxes by a body like the CAB. The most important amendment is the provision to the 1994 Act that permits the exchange of information between the Revenue Commissioners and the Irish police in appropriate circumstances.239

Other challenges faced on the course of implementation of the PoCA were: (i) delays in final disposition, (ii) delays at the court due to a large backlog of cases at the Supreme Court, and (iii) difficulty in obtaining sufficient admissible evidence that would lead to asset forfeiture and lawyers have used the process to avoid confiscation. Provisions have been made to ensure sufficient protection for the respondent and any innocent owner, but this feature has and is being abused by respondents and their attorneys. There are a number of cases that have been in the courts for more than 14 years; for example, Gilligan, which is one of the earlier cases brought under the PoCA. The most recent decision was made in January 2011, to which there is an appeal in the process. However, the abilities to remedy the situation are limited.

The PoCA was and continues to be subject to criticism by academics, the defense bar, and others, including European countries that consider civil forfeiture to be a drastic response to crime. The broad nature of the Act has been recognized by the Irish Supreme Court as well as by other courts, but they have justified it as a measured and proportionate response to the crime and the threat it poses to society. On the other hand, academics believe that it is a fundamental breach of traditional justice violating the right to due process and is open to abuse.240 Similarly, members of the defense bar believe that powers vested in the CAB are too far reaching and create a gross imbalance of power between the respondent and the state.241 It has been especially criticized for the investigative power of the CAB. This power derives from the combination of revenue, police, and social welfare, and access to a large amount of information, a powerful weapon in the hands of the CAB. Critics state that this power discriminates against the individual party to a proceeding. Although it was stated that there is not a sentiment that the CAB has abused these powers, it is believed that the CAB uses them extensively to investigate and pursue proceeds of crime cases.

Defense bar members also criticize features of the PoCA that the CAB considers critical to successful application of the Act. These features include the admissibility of “belief evidence” or a statement by an authorized officer that there are reasonable grounds to believe that the respondent owns or controls property that is proceeds of crime. They further criticize the provisions safeguarding the anonymity of the CAB members as well as that of witnesses on whose information the CAB relies, and the use of the PULSE database for information. The defense bar also claims that the PoCA breaches fundamental property rights.

239 Felix J. McKenna and Kate Egan, “Ireland: A multi-disciplinary approach to proceeds of crime,” p. 52–92, in Simon N.M. Young, Civil Forfeiture of Criminal Property, 2009, Edward Elgar Publishing, Inc. 240 Interview: Demot Walsh, Professor of Law, University of Limerick (March 4th, 2011) 241 Interview: Dara Robinson, Barrister, Ireland (May, 10th, 2011)



In most cases, the main concern expressed by legislators, legal professionals, and others is the potential for abuse of power under the PoCA. In the study’s review of a considerable amount of case law, and during the team’s interviews with representatives of various agencies, this concern was never expressed, nor were there cases in which there was a potential for abuse. Further, during the past 14 years of implementation there have never been accusations or media reports of potential abuses of the Act. This speaks highly of the professionalism of the CAB officers and the cases they chose to pursue.

Finally, the PoCA has been highly targeted on and limited to specific areas of criminal activity. The major areas of criminal activists against which the Act has been used are drug-trafficking offenses, financial fraud, VAT fraud, corruption, and corporation offenses.

In Ireland, both the anecdotal and statistical evidence lead us to believe that the PoCA and the CAB, with its extensive powers, have had an impact in reducing criminal activities in Ireland. Statistics show that the CAB has used these powers extensively and quite effectively. The available data on the number of cases commenced by the CAB and the number of orders made, as well as the successful application of the cases, show that the CAB has continued to work consistently in attacking proceeds of crime and that it is doing so successfully.


Country Focus –Ireland/Case Law 142

Irish Case Law

Since enactment of the PoCA in 1996, Irish courts have developed significant jurisprudence on it, clarifying and interpreting provisions of the Act, delineating timelines, and providing future guidance for the CAB and the respondents. The courts have on many occasions recognized the broad nature of the legislation permitting a person to be deprived of his or her property based on allegations supported by hearsay evidence. Nevertheless, they continue to uphold its constitutionality holding that the PoCA is a proportional response to the risk society faces from serious and organized crime. The structure and the workings of PoCA have been justified on the grounds that professional criminals have adopted sophisticated means to conceal the proceeds of their criminal activities from authorities and the state should respond proportionately.

PoCA also has been challenged by respondents on the basis that it does not uphold the fundamental rights guaranteed under the European Convention of Human Rights (ECHR). Irish courts have contended that the decisions of the ECHR cannot present grounds on which local legislation can be declared unconstitutional. The Judge of the High Court, in Murphy v. GM PB PC Ltd,242 held that, “I am bound by the repeated decisions of the Supreme Court that the European Convention of Human Rights is not part of the domestic law of this jurisdiction.” He added that most of the protections afforded by it were already enshrined in the Irish constitution.

The constitutionality of PoCA was challenged on the grounds that it was ersatz de facto civil law and that it violated the constitution because it did not uphold the rights guaranteed by it such as the presumption of innocence, privilege not to self-incriminate, and the right to private property. Whenever reviewing the constitutionality of PoCA of 1996, as well as other Acts passed by the Oireachtas (the Irish parliament), Irish courts have followed a number of principles stipulated in East Donegal Co-operative Limited v. Attorney General243, cited in Gilligan v. CAB,244 where it was stated that the court would consider the challenged provisions constitutional until the contrary was clearly established by the respondent. The court would always favor the provisions in case of doubt and would not declare them unconstitutional if they could be construed to be in accordance with the constitution. It would be presumed that it was the intention of the legislators for the proceedings to be in accordance with the principles of constitutional justice. However, in Murphy the court held that because of the circumstances in which the Act was passed, the presumption of constitutionality in this case was less strong than in other cases. However, the court added that the presumption of constitutionality arises from the obligation the courts have toward the Oireachtas legislators.

Another challenge was that in substance, it was a criminal law without the protections afforded by the criminal law, such as presumption of innocence and application of the standard of proof—beyond reasonable doubt—required in criminal cases. The High Court, in Murphy v. GM PB PC Ltd,245upheld the civil nature of the Act and reasoned that the proceedings under the Act do not contain the “indicia of crime” as prescribed by Justice Kingsmill Moore J., in Mellingv. O’Mathghamhna246 where it ruled that no one is charged with a criminal offense, there are no prosecutors, no offense is created, no sanctions are imposed, and there is no mensrea. The court further held that forfeiture under the PoCA is an in rem proceeding and that forfeiture does not constitute a penalty or a punishment but that it is a measure imposed on the respondent whose aim is to restore or remedy the situation. This conclusion was further supported in Goodman v Hamilton,247 stating that there is nothing in the Irish constitution requiring that charges be brought only in one of the proceedings. Similar contentions were made by the respondent in

242Murphy v. GM PB PC Ltd,[1999] IEHC 5 (HC). 243East Donegal Co-operative Limitedv. Attorney Genera [1970] IR 317 244Gilligan v. CAB, [1997] 1 IR 526 (HC). 245 Ibid. at 26. 246Melling v. O’Mathghahn, [1962] IR 1 at pp 24/25. 247Goodman v. Hamilton (No. 1), [1992] 2 IR 542.



Gilligan v. CAB248 but the court dismissed the claims, relying on the authority of the decision of the Supreme Court in the Southern Industrial Trust249 case which established that forfeiture proceedings are not necessarily criminal in nature. It was further held in Gilligan that there is no constitutional bar on the determination in civil or other proceedings of matters that may constitute elements of criminal offenses and affirmed that the proceedings under the PoCA are civil in nature. The court, in Murphy v. M(G)250 even relied on several U.S. Supreme Court decisions251 contending that proceedings under Sections 3 and 4 are civil proceedings.

In reviewing whether or not enactment of the PoCA was a proportionate response to the threat posed to society, the High Court, in Gilligan, held that the legislature was justified in enacting the PoCA of 1996 restricting certain rights through the Act. The court held that the Supreme Court and the High Court “have accepted the principles that rights, even constitutional rights, are not absolute, but may be restricted where required by the common good or the need to protect society.252” This ruling cited a number of landmark cases where the court stated that citizens’ rights are not unlimited and that the state is entitled to encroach on those rights by imposing forfeiture to prevent and deter future crime. In determining the proportionality of PoCA, the court relied on the judgment in Heaney and McGuiness v. Ireland253which laid out authoritatively the test of proportionality, attempting to maintain the balance between the notion of minimal restraints of rights and the necessity of the common good. The court there cited a recent formulation of the Supreme Court of Canada which held that:

The objective of the impugned provisions must be of sufficient importance to warrant overriding a constitutionally protected right. It must relate to concerns pressing and substantial in a free and democratic society. The means chosen must pass a proportionality test, they must; a) be rationally connected to the objective and not be arbitrary, unfair or based on irrational considerations; b) impair the right as little as possible; and c) be such that their effects on rights are proportional to the objective.254

This test also is frequently adopted in the ECHR.255 The court reasoned that restraining some rights was justifiable but went further and added that it was essential to limit any restriction of those rights as much as possible and that those rights must be balanced with various safeguards included in the Act. Grounds for justifying the limitation of rights included the sophisticated criminal operations carried out by criminals who were able to make themselves immune to the ordinary procedures of criminal investigation and prosecution, and who, through fear and threat, prevent others from passing information to the police. Finally, the court held that it was particularly concerned about Section 9 of the Act and the manner in which it may affect the privilege against self-incrimination, and about Section 8, which permits admissibility of hearsay evidence. The court emphasized that courts must be careful when issuing an order under Section 9 limiting the use of the information obtained under this section and not allowing the use of this information for any future criminal prosecution.

The burden of proof under the PoCA shifts to the respondent in two situations. First, Section 9 of the Act authorizes a court to issue an order compelling the respondent to disclose and specify property in his or her possession or control and sources of income. Second, under Sections 2 and 3 of the Act, after the CAB establishes and satisfies the court that the concerned property constitutes proceeds of crime, the 248Gilligan v. CAB,[1997] 1 IR 526 (HC). 249Attorney General v. Southern Industrial Trust Limited and Simons,[1960] 94 I.L.T.R. 161. 250Murphy v. M(G), [2001] IESC82 (SC). 251 Including United States v. Ursery,(1996) 135 L Ed 2D549, citing Reihnquist C.J., that the U.S. Congress has authorized the government to seek parallel in rem civil forfeiture actions and criminal prosecutions based on the same underlying events. Various Items of Personal Property v. United States, 282 US 577, ... forfeiture proceedings are instituted against the property, while a criminal prosecution is instituted against a person, and forfeiture is no part of the punishment for the criminal offense. 252Gilligan v Criminal Asset Bureau and Others(Transcript) 1997 253Heaney and McGuiness v. Ireland, [1994] 3 IR 593. 254Chaulk v R [199O] 3 SCR 1303 pp 1335 and 1336 255 Kearns Newspapers Limited v. United Kingdom, [1979] 2 EHRR 245.



respondent must tender evidence to establish the contrary and refute the state’s claims. The provisions that shift the burden of proof to the respondent have been challenged frequently by respondents on the grounds that they violate the privilege against self-incrimination, the right to silence, and the presumption of innocence. In Murphy v. M (G), the respondent held that there was no equality of arms between the parties because evidence of opinion was permitted in the case of the applicant but not in the case of the respondent. The court disagreed, stating that the respondents, as property owners, should be able to submit evidence regarding the origin of the property without calling on opinion evidence. In support of the decision, the court referred to a decision of the Privy Council, in McIntosh v Lord Advocate256 in which it was stated that:

Direct proof of the proceeds is often difficult, if not impossible… assumptions that property held by the accused could in certain circumstances be assumed to have been received in connection with drug trafficking…. They related to matter that ought to be within the accuser’s knowledge, and they are rebuttable by him at a hearing before a judge on the balance of probabilities. In my opinion a fair balance is struck between the legitimate aim and the rights of the accused.

The court further referred to the decision of the ECHR, in Phillips v. United Kingdom257, in which the court disagreed with the appellant’s contentions that assumptions under the Act of 1994 violated the right to be presumed innocent holding that the court had carried out judicial procedure including holding public hearing, requiring advance disclosure of the prosecution case, and enabling the applicant to submit further evidence. The court held that the appellant could have rebutted assumptions under the Act, on balance of probabilities, and showed lawful origin of his property. The court held that it was a matter for the court, in considering hearsay evidence, to decide what weight should be given to the evidence.

Respondents in Gilligan v. CAB [1997]258 (same parties but different appeal) contended that the reversal of the burden of proof was unfair and impermissible and that it violated Article 38.1 of the Constitution, breaching the natural justice and constitutional justice. Counsel for the respondent also claimed that Sections 2 and 3 of PoCA were in breach of Article 38.1 of the Constitution because they required the plaintiff to establish that the property that was frozen under those sections was not the proceeds of crime, failing to protect the presumption of innocence. In earlier debates, it was considered that the legislation did not foresee the reversal of the burden of proof but merely a reduced standard of proof. However, the Supreme Court, in recent cases, has concluded that the burden of proof was in fact reversed but that it occurred only after the court was satisfied on the evidence produced by the appellant. It also added that extra examination is allowed in the procedure and there is no prohibition to placing the burden on the person and seeking to have him or her negate the inferences from evidence adduced that a criminal offense has been committed. Further, in Felix J. McKenna v. H and another,259 the courts held that the respondent would be in possession or control of the property and should be in the best position to give evidence to the court. In essence, respondents are in the best position to counter any evidence, including hearsay evidence, which could be tendered by the applicants in relation to such property.

In Gilligan260, the courts held that the state bore the evidentiary burden of proof because the state must satisfy the court, on the balance of probabilities that the respondents were in possession or control of property that was proceeds of crime. In other words, the property was directly or indirectly, in whole or in part, derived through unlawful activities and that the property exceeded a defined threshold. A court held that then and only then did the burden of proof shift to the respondent to furnish any evidence to the court. The court also held that the respondent was free to challenge and discredit evidence tendered by the applicant, via cross examination, on an affidavit or by introducing new evidence and/or witnesses. With regard to the presumption of innocence, the court added that once it was established that the proceedings 256McIntosh v Lord Advocate (2001) 2 All ER 638 257Phillips v. United Kingdom, (U/R. Judgment delivered 5 July 2001) 258Gilligan v. Criminal Assets Bureau, [1997] IEHC 106 (HC). 259Felix J. McKenna v. H and another,[2006] IESC (November 2006). 260 Gilligan V CAB [ 1997] (Transcript) p. 18



under the PoCA were civil in nature, there was no constitutional impediment in reversing the burden onto the respondent and the presumption of innocence principle did not apply.

The constitutionality of the PoCA also was recently challenged in CAB v. O’Brien & Anor261and the court relying on the authoritative decision of McKracken in M v. D,262defined the standards of evidence required to establish that a property constituted proceeds of crime. The court held that “evidence adduced on behalf of the applicant constitutes a prima facie case under both s.2 and 3, the burden thereafter shifts on the respondents.” The court went further to find that the applicant had satisfied the court that the property subject to the proceeding constituted proceeds of crime by producing evidence to prove that the respondent had been involved in criminal activities, had no continuous employment, and had no regular sources of income yet there were a number of uncorroborated transfers to his bank accounts. Cross-examination of the applicant further reinforced the evidence. Thus, the court held that the funds available to the respondents from unexplained, unknown and uncorroborated sources could rationally be explained as funds derived from criminal activities. The court held that the inability of the respondents to present evidence or witnesses that would explain the sources of the funds or property available was sufficient to show that the funds were derived from criminal activities.

The provisions that shift the burden of proof also were challenged on the basis that they breach the respondent’s privilege not to self-incriminate and the right to silence. Justice Moriarty, in M v. D,263 expressed reservations about the statement “innocents have nothing to fear,” stating that it does not hold up in this case because of the closeness between the applicant and the DPP, and requested that the DPP make an undertaking to prevent use of information in any future criminal proceedings. This was further affirmed in Gilligan where the court required that the type of undertakings required by Moriarty were essential in every case in which orders under Section 9 were sought.

The court attempted to strike a balance in protecting the fundamental rights guaranteed by the prosecution and enable the working of orders under Section 9. The court affirmed that respondents’ right to silence and the privilege not to self-incriminate were not absolute and could be curtailed in the public interest, validating the respondent’s obligation to respond to an order of the court otherwise he or she would invoke the court’s contempt. However, the court decided to limit the use of information secured under PoCA to the proceedings for which the disclosure was made, relying on the authority of the decision in Re O,264 too. The court stated that the state should be careful to protect a respondent’s privilege in releasing information that could later be used in a criminal prosecution.

Respondents also have argued that the use of hearsay evidence in a proceeding under PoCA is unconstitutional because it is based on evidence of belief tendered by the applicant and that there is no direct evidence that the property represents proceeds of crime. In Murphy v. G.M, the court held that the evidence of belief under Section 8 did not have to be direct. Similarly, Moriarty held, in M v. D, that although PoCA was silent on the nature of proof sufficient to persuade a court to issue a Section 3 order, it was widely accepted that courts would accept hearsay evidence in affidavits filed on behalf of the parties but that the conclusiveness of the evidence would be corroborated by either facts or cross examination by the respondent. He added that the courts must remain vigilant in safeguarding the liberty of citizens, particularly in cases where hearsay evidence is admissible mainly by ensuring that the respondents were provided with an opportunity to cross examine the witnesses. Arguing that PoCA was designed to deprive those engaged in unlawful activities, Moriarty added:

261CAB v. O’Brien &Anor, [2010] IEHC 12 (HC). 262M v. D, IR 175 (unreported judgment)–Moriarty J. (HC) (December 1996). 263 Ibid. at 38 264In Re O [1991] 2 QB 520.In this case an order restraining assets under Section 77 of the Criminal Justice Act, and subsequently requiring that the defendant disclose his or her assets by affidavit. The request was appealed by the defendant, claiming that the court had no jurisdiction to make such an order. Court held that in absence of any express jurisdiction there was an ancillary power to make a disclosure.



I am clearly entitled to take notice of the international phenomenon, when significant numbers of persons who engage as principals in lucrative professional crime, particularly that referable to the illicit supply of controlled drugs, are alert and effectively able to insulate themselves against the risk of successful criminal prosecution through deployment of intermediaries….. thus the Act is designed …… not to achieve penal sanctions but to deprive such persons of illicit financial fruits of their labor.

The respondent also contested the use by the applicant of the transcript from an earlier trial as a proof, a contention the court dismissed, holding that there are no grounds for objection because the transcript was used only to account for what was stated in the course of the trial. Further, in McKv. D, the court held that Section 8 envisioned a two-stage process in evaluating the evidence. First, the court heard evidence of an authorized officer but this was not sufficient to make it evidence. The applicant also was invited to call as witnesses persons on whose information he relied. Although the court reasoned this was not necessary it helped in establishing the reasonableness of the applicant’s belief. It then was up to the judge to evaluate the weight attached to the testimony. A distinction must always be made between the existence of evidence and its persuasive value.

In the same case, Justice McCracken, dissenting with Justice Fenelly, laid out a seven-step process for a trial judge when reviewing evidence tendered pursuant to Section 8:

(1) He should firstly consider the position under section 8. He should consider the evidence given by the member or authorized officer of his belief, and at the same time consider any other evidence, such as that of the two police officers in the present case, which might point to reasonable grounds for that belief.

(2) If he is satisfied that there are reasonable grounds for the belief, he should then make a specific finding that the belief of the member or authorized officer is evidence.

(3) Only then should he go on to consider the position under section 3. He should consider the evidence tendered by the applicant, which in the present case would be both the evidence of the member or authorized officer under section 8 and indeed the evidence of the other police officers.

(4) He should make a finding whether this evidence constitutes a prima facie case under section 3, and if he does so find, the onus shifts to the respondent or other specified person.

(5) He should then consider the evidence furnished by the respondent or other specified person and determine whether he is satisfied that the onus undertaken by the respondent or other specified person has been fulfilled.

(6) If he is satisfied that the respondent or other specified person has satisfied his onus of proof then the proceedings should be dismissed.

(7) If he is not so satisfied he should then consider whether there would a serious risk of injustice. If the steps are followed in that order, there should be little risk of the type of confusion which arose in the present case.

This decision has, according to CAB legal officer, guided the work of the CAB in filing applications and in preparing evidence to satisfy the court that the property subject to a proceeding constitutes proceeds of crime. The decision is also important because it specifies the moment at which the burden of proof shifts to the respondent to adduce new evidence and prove the legitimate source of the property.

Another important element of the Irish PoCA that makes it unique in its approach is that there is no requirement that the applicant (i.e., the state), when initiating a proceeding, show that an offense was committed or that the property in question was derived from commission of a specific offense. It was held by the Supreme Court, in McKv. F and H,265 that Parliament designed the Act in a way that it is applicable 265McKv. F and McKv. H[2005] 2 IR 163 (SC)



in circumstances in which the applicant is not able to show a relationship between the property alleged to be proceeds of crime and a specific crime or crimes. The court went further to add that PoCA would be useless and unworkable if specific assets had to be related to a specific crime and this was not the intention of the Act. To support its decision, the court cited a statement made in an unreported judgment of the High Court, where the judge held that:

I am satisfied that it is unnecessary for the plaintiff to rely upon specific crimes or to relate items of property sought to be attached by an order under s. 3 of the Proceeds of Crime Act, 1996 to the commission of a specific crime and the plaintiff can make a sufficient case by relaying on opinion of evidence that the property in question constituted directly or indirectly the proceeds of crime or that the property was acquired in whole or in part with or in connection with the property that directly or indirectly constitutes the proceeds of crime.

This decision was further affirmed in F & F266 where the court held that it was unnecessary for the applicant to rely on specific crimes or to relate to the commission of specific crime the specific property sought to be restrained by the order.

PoCA also was challenged on the basis that it violated Article 40.3 of the Constitution because it does not protect private property from an unjust attack. In Gilligan v. CAB it was held that, while forfeiture provisions of the Act admittedly affect the property rights of the respondent, the effect involved does not rise to the level of an unjust attack, which is necessary for constitutional protection, considering that the applicant must first show that the property at issue constituted the proceeds of crime. The judge also added that the right to private ownership cannot hold a place so high in the hierarchy of rights that it protects the position of assets illegally acquired. Finally, the court dismissed the respondent’s contention that the PoCA violated the right to private property, referring to Clancy v. Ireland, where Barrington J stated that “abridgment of property rights provided for under the Act was a permissible delimitation of property rights… and was not a breach of fair procedures”, citing also the decision of the U.S. Supreme Court, in Calero-Toledo v. Pearson Yacht Leasing Company, (1974) 416 US 66. In M v. D, the court held that although it could be argued that the Act did not provide sufficient protection for private property, “this erosion must be balanced against the public interest inherent in the section, so that the unjust attack on property rights is in fact disclosed.

The issue of jurisdiction was often debated by the courts, although initially, in F. Mck. v A.F., the Supreme Court held that the 1996 PoCA did not apply to the proceeds of crime committed in another jurisdiction. A similar challenge was brought in Gilligan. The court later concluded, in Murphy, that the operation of the standard canons of construction determined that the words “proceeds of crime” included criminal offenses committed abroad. However, this contention was overturned by the Supreme Court. This prompted the government to amend the 1996 Act in 2005, and to include the proceeds of extra-territorial criminality within the statute. In relation to the statute of limitations, the court held that it did not apply at any stage of proceedings under PoCA.

On the retroactivity point, it was held that the acquisition of assets derived from crime was not an illegal activity before the passage of the 1996 Act and so did not become illegal because of the 1996 Act. Therefore, no law was imposed retroactively.

266McKv. A.F. and J.F[2002] IESC (30 January 2002)

Ireland Conclusions

It can be concluded that the Proceeds of Crime Act 1996 has had an impact in in fighting and deterring crime in Ireland. The majority of our interviewees were explicit in their assertions that during the first five years of the implementation of the Act it had a remarkable impact, as those engaged in criminal activities were not experienced and prepared in hiding proceeds derived from unlawful activities. During the first few years, the CAB was successful in tracing, identifying, freezing and subsequently forfeiting assets or property considered to be proceeds of crime. It is reported that the Bureau had forfeited and transferred to the Irish Exchequer in excess of €105M, or US$140M in revenues and had over €55M or US$76M, of assets frozen. As a consequence, it is widely believed that many engaged in criminal activities moved their activities and assets outside Ireland and resulting in a noticeable reduction of crime in the country, although no quantifiable and statistically sound evidence exists. The reduction of crime rates in Ireland may be also a result of criminals adjusting to the new circumstances created after the enactment of the law and being better skilled in hiding their assets. The success rate of the implementation of civil confiscation to date is considered to be 100%.

Conclusions drawn from experience of Ireland and Australia As found in both Australia and Ireland, UWOs have the potential to be a powerful weapon in the fight against organized and serious crime. If used appropriately they can deprive criminals of their ill-gotten gains, they are especially effective in forfeiting assets that are difficult to be connected to an offense. However it is important to emphasize that their effectiveness is limited. While powerful, expectations about their impact should be moderate and realistic.

Active and judicious enforcement is critical for any law including UWOs. As discussed earlier in the report, the Irish CAB has actively and successfully applied the Proceeds of Crime Act and other forfeiture powers available to it. In Ireland a number of UWOs were brought against high profile cases, including John Gilligan, one of the biggest drug lords in Ireland at that time, who was also suspected of being involved in the murder of the Journalist Veronica Guerin. Other high profile cases include a soccer player involved in drug dealing, VAT tax fraud, insurance fraud and a high profile corruption case. On the other hand, UWOs have not been extensively used and their potential was not exploited in full in Western Australia, thus failing to meet the expectations and the objectives it was set out to achieve. However some cases have been instituted, for example against people who had no apparent source of income and lived lavished lifestyles, including a motorbike gang and unemployed but rich individuals. However, no so-called “big fish” have been targeted until recently.

Although there is a lack of data gathered in Ireland to evaluate the impact the UWO has had on crime, the authors of the report, based on a series of interviews with relevant Irish stakeholders, have come to a conclusion that the law has had a positive impact in fighting crime. Our interviewees, representing various powerful institutions and agencies in Ireland, including academics and civil society groups, were unanimous in their belief that the CAB has played a significant role in reducing crime, in particular drug trafficking, forcing a number of criminals out of the country or at least out of sight. A large portion of the success of the Irish forfeiture regime is attributed to the CAB and the way the Irish government planned and executed introduction of the new forfeiture regime.

The success of the Irish forfeiture regime is also attributed to the excellent multidisciplinary teams of the CAB. Personnel from police, customs, tax and social welfare are brought to work together collectively. While working for CAB they retain the powers and duties vested in them within their home agencies and also have the powers of their CAB colleagues, i.e., each is cross-deputized. Combining these resources, skills, and experience in one agency enables the CAB to attack the proceeds of crime from three different aspects, forfeiting property constituting proceeds of crime, taxing it, and denying social welfare payments to the respondents who own or control such property. From the outset the agency was given adequate financial and human resources, including highly skilled legal officers, computer technicians, forensic


Review of U.S. System 149

accountants, and a well-trained law enforcement officer. Further they have continuously provided training to CAB officers, as well as complete anonymity, and attractive compensation packages. The CAB leaders have been reluctant to grow and expand, holding that a small group of highly trained and committed professionals is more likely to be effective and efficient.

In contrast, the study team was told that the state of Western Australia had not allocated sufficient human and financial resources to the DPP, which was given the authority to institute UWOs and other forfeiture schemes available under the Criminal Property Confiscation Act of 2002. This has resulted with a small number of UWO applications. The DPP partly explains the small number of UWO applications because of the availability of other forfeiture schemes, including powerful automatic confiscation of both lawful and unlawful property owned by a declared drug trafficker, which has overshadowed and drawn resources from UWOs. Still, the DPP recognized that it has not given the attention to asset forfeiture they should, as they were more focused on prosecuting criminals rather than targeting assets. Initially, when the CPCA was introduced, the DPP has allocated only one confiscation lawyer to deal with all asset forfeiture schemes (later increased to three) available under the Act; it was only over the past couple of years that more resources have been allocated. Now the confiscation team numbers a total of 18 confiscation lawyers and the police, and now have six forensic accountants (up from one). This expansion correlates with a high number of UWO applications being made over the past three years. Moreover, the state of WA is also considering of delegating the UWO powers to a Corruption Commission that will be focused solely on targeting tainted assets.

As new and untested legislation, the original UWO laws have had a number of weaknesses and deficiencies that have hindered efficient and successful operation of the Act. The Irish CAB proposed and succeeded to amend the Proceeds of Crime Act several times, improving its efficiency and scope. In this regard, the scope has now been extended to cover proceeds of foreign offenses, shortened the seven years waiting period to four before the property is forfeited to the state with mutual consent of the parties. Additional amendments are being debated such as including the proposal to reduce the waiting period further, allowing for disposal of property while the interlocutory (restraining) order is in effect enabling the CAB to preserve the value of the property.

Similarly, Western Australia has noted that the law contains deficiencies that make application of the Act more difficult and burdensome for the DPP. One of the key weaknesses of the legislation highlighted is the overly prescriptive valuation of assets method provided in the law. The provisions as interpreted by the DPP and the courts implying that for the court to determine that the respondent owns or controls unexplained wealth, it will need a full inventory of his/ her wealth, including the wealth consumed. These valuation methods are considered cumbersome and demanding imposing a heavy burden on the DPP to identify, trace, value, and determine the origin of each item of the property including those consumed and discarded. However, unlike in Ireland, no legislative proposal has been made to date to amend these deficiencies.

It is also notable that both Ireland and Australia apply a higher standard of proof in UWO cases than that inferred by the law. Both laws provide that the standard of proof in an unexplained wealth forfeiture proceeding is the preponderance of evidence (balance of probabilities), however in practice both Ireland and WA prosecutors have used a higher standard - - clear and convincing evidence - that the property constitutes unexplained or tainted property. Ireland’s CAB self-imposed this higher burden of proof and with that has gained the trust and sympathy of the court and wider public. In WA a higher standard of proof was imposed by the High Court of Australia.

The ability to pursue forfeiture of property without tying it to a predicate offense has been one of the plus points of legislation in both countries. Lack of a predicate offense requirement has been upheld by the courts in Australia and Ireland, recognizing the importance of seizing assets without having to prove a connection with an offense. Moreover, the courts of both countries have held that if such a requirement



were to be included in the law it would make the law unworkable and defeat its purpose. However, both the DPP and the CAB have been pressed to show some form of criminal conduct. In reality and in many cases, the state has tendered sufficient evidence that there are reasonable grounds to believe that the respondent has been engaged in criminal activity, without having to show that the person has actually committed an offense.

The Australian UWO forfeiture scheme is in personam, an action is brought against the person, on whom a penalty is imposed and not a sanction. In this regard, the courts have been careful to differentiate that the forfeiture of property is not a sanction imposed on the individual but rather a penalty imposed on the property. Similarly, although Ireland holds that its O is an in rem proceeding, the law requires that a property owner be identified in the application. Exceptions are only allowed if the owner has absconded or has died, in all other cases the property owner has to be identified.

Allocating specialized judges to forfeiture cases has affected successful application of the law in Ireland. Because of the complex nature of the law and the cases that are heard, the CAB requested early on that judges be allocated to hear forfeiture cases, creating a bench well-versed in UWO and non-conviction forfeiture regimes. In addition, this ensured that cases are heard more quickly. Without this provision, backlogs have been cited in Australia to be one of the reasons affecting the efficiency of the application.

Further, careful and appropriate selection of cases, as well as highly professional preparation of cases, has resulted in successful applications leading to forfeiture of property in Ireland. The CAB has a complex and judicious screening process in place ensuring that only meritorious cases are pursued. Cases are prepared and presented in a comprehensive and professional manner using charts and diagrams to portray complex information understandable to non-financial experts. Exceptional work quality helped CAB establish and maintain a good reputation and earn the trust of public opinion. Although CAB has operated for over 14 years, no concerns have been raised by the media regarding inappropriate targeting of cases or abuse of powers by the CAB. WA has also been careful in selecting and targeting its cases. Their carefulness however is seen as overly conservative, failing to make unexplained wealth applications when they should. This may have increased after 2004 after DPP was publicly criticized for making an unexplained wealth application for an elderly couple’s house, after they were convicted of having cannabis that their son concealed drugs on their property. It is believed that because of this criticism the DPP did not make any unexplained wealth application between 2004 and 2007.

Ireland has avoided criticism by not adopting equitable sharing. All assets and monies recovered from the forfeiture schemes under PoCA are transferred to the Irish budget and no funds are directed or transferred to support activities of the CAB. Although equitable sharing is a practice used in the US the Irish have refused to do so. However, it is important to note that resources have never been an issue for the CAB. The Irish government continues to regard the work of the CAB as a priority and they have never faced budget cuts. While Australia has in place an equitable sharing system, whereby 20 percent of forfeited assets are transferred to the police to support asset forfeiture squad, this has never been raised as an issue of concern by the public or opponents of the Act. It may as well be that this is due to relatively low amount being forfeited to date.

UWO laws have been in place for over ten years and Ireland has made significant progress in improving the legislation and addressing the weakness in the implementation policies and operations of the Act.

Review of US System 151

IV. REVIEW OF THE U.S. SYSTEM 4.1 General Overview of Asset Forfeiture in the U.S. Much has been written on U.S. asset forfeiture both by its supporters and critics.267 Therefore for this report, we provide only a brief overview of federal statutes containing civil asset forfeiture provisions, focusing on the Civil Asset Forfeiture Reform Act (CAFRA) of 2000, which is the only statute that attempts to provide for uniform forfeiture proceedings for a broad variety of offenses. The bulk of this section of the report focuses on transferability of UWO laws to the U.S., should the government contemplate enactment of a similar statute.

History of Civil Asset Forfeiture in the United States

Civil asset forfeiture has existed in the United States since the English colonies applied it in enforcing forfeiture statutes. The concept of in rem forfeiture proceedings can be traced to the Biblical era and ancient English common law. In these laws, an object directly or indirectly causing the accidental death of a King’s subject was forfeited to the Crown as a deodand268 to support funeral costs of the deceased. In addition, English common law allowed forfeiture of estates as a consequence of criminal conviction and treason.269 English common law also provided for seizure and forfeiture of vessels and cargos violating customs laws.

Forfeiture laws in the United States, however, did not originate from the law on deodand or other forfeiture laws following conviction of the defendant of an offense. They were based on the 17th century British Navigation Act that provided for forfeiture of vessels and contraband goods. In 1789, the first Congress of the United States introduced civil asset forfeiture, authorizing seizure and forfeiture of ships and cargos involved in customs offenses.270 Since then, civil asset forfeiture laws have expanded significantly, as noted by Justice Douglas in Calero-Toledo271stating, “the enactment of forfeiture statutes has not abated; contemporary federal and state forfeiture statutes reach virtually any type of property that might be used in the conduct of a criminal enterprise.”

Civil forfeiture is an in rem civil proceeding instituted against the property itself, attaching guilt to the property, and thus resorting to the legal fiction that the property itself is guilty of an offense. Moreover, the standard of proof is a civil standard—probable cause or preponderance of evidence, which is a much lower standard of proof than the beyond a reasonable doubt standard required in criminal proceedings. Because it is a civil proceeding, many of the constitutional protections afforded to the defendant in a criminal proceeding are not applicable. Early cases of in rem forfeiture were upheld by the Supreme Court of the United States,272 allowing the government to seize and subsequently declare property

267 See Stefan D. Casella, Overview of Asset Forfeiture Law in the United States, January 2004; Casella, The Development of Asset Forfeiture Law in the United States, available at http://works.bepress.com/stefan_cassella/9. Marc B. Stahl, Asset Forfeiture, Burdens of Proof and the War on Drugs, 83 J. Crim. L.& Criminology 274, 1992–1993, Christine M. Durkin Civil Forfeiture under Federal Narcotics Law; The Impact of the Shifting Burden of Proof upon the Fifth Amendment Privilege Against Self Incrimination, etc. 268“given to God” 269Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974)—Justice Douglas gave a brief historical overview of the development of asset forfeiture in English common law and in the United States. 270 Stefan D. Casella The Development of Asset Forfeiture Law in the United States, available at http://works.bepress.com/stefan_cassella/20 271 Ibid. at 2 272 See Austin v. United States, 509 U.S. 618, Bennis, 516 U.S. 472 (1996)



forfeited, regardless of the owner’s guilt or innocence.273 It further enabled the courts to overcome jurisdictional issues; often in smuggling cases, the property was found within the jurisdiction of the United States but the property owner was in another country or could not be located at all. In this regard, the Supreme Court held that civil forfeiture was closely tied to the practical necessities of enforcing admiralty, piracy, and customs laws.274 Therefore, only an in rem forfeiture proceeding, instituted against the property, would enable the government to seize and declare forfeited property that was involved in the commission of an offense. It enabled the government to remove the property from circulation and subsequently prevent and deter the wrongdoers from using it again to commit an offense. It also enabled the government to collect customs duties owed to it on the imported goods.275 In this regard, the Supreme Court held in Austin276 that—

Forfeiture of property used for illegal activity serves a deterrent purpose, distinct from any punitive purpose, both by preventing further illegal use of the property and by imposing an economic penalty, thereby rendering illegal behavior unprofitable; by providing for the forfeiture of an innocent owner's interest in the property.

As indicated above, initially, the concept of in rem forfeiture was applied to the property as an “offender,” attaching guilt to the property itself. It was only much later that the concept of the instrumentality of crime evolved; the property itself is not guilty of wrongdoing but as stated in Austin, it is an instrumentality of an offense—“the actual means by which an offense was committed.”

Although civil forfeiture laws were greatly expanded during the 20th century to cover forfeiture of property derived from other offenses, including counterfeiting, gambling, alien smuggling, and drug trafficking,277 they in essence were limited to directing forfeiture of the property considered an instrument of an offense. It was only after the Congress amended drug forfeiture statutes between 1978 and 1984, that the proceeds of an offense and later property used to facilitate commission of an offense could be subject of a forfeiture proceeding.278 Further in the 1970s, Congress introduced in personam criminal forfeiture following conviction of the defendant of a criminal offense. Although criminal forfeiture was widely applied in English common law, the U.S. Congress refused to enact in personam forfeiture as punishment for federal crimes,279 and reenacted this ban several times over the course of two centuries

273Historically the conduct of the property owner was irrelevant; indeed, the owner of forfeited property could be entirely innocent of any crime. See Origet v. United States, 125 U.S. 240, 246 (1888), “The merchandise is to be forfeited irrespective of any criminal prosecution…” 274 “Policing for Profit; The Abuse of Civil Asset Forfeiture”—Miriam Williams, Ph.D., Jefferson E. Holcomb, Ph.D., Tomislav V. Kovandzic, Ph.D., Scott Bullock—Published by Institute for Justice, March 2010, citing The Palmyra, 25 U.S. 275 See Bajakjian, 524 U.S—stating that in rem forfeiture of smuggled goods served to vindicate the government’s underlying property right in customs duties. 276 See Ibid. at 5. 277Stefan D. Cassella. "The Development of Asset Forfeiture Law in the United States" ActaJuridica. Ed. J. Burchell and A. Erasmus. Cape Town, South Africa: JUTA & Company, LTD, 2003. 314-359. Available at: http://works.bepress.com/stefan_cassella/15 278 See Drug Abuse Prevention and Control Act 21 U.S.C 881—provides for forfeiture of controlled substances, materials and equipment, containers, conveyances, and records involved in unlawful drug related activity. Section 21 U.S.C. 881 (a)(6) 1978—provides for forfeiture of the proceeds of illegal drug transaction if a traceable connection between the property and the illegal activity exists; 21 U.S.C. 881(a)(7) 1984—provides for forfeiture of real property used or intended to be used to commit or to facilitate the commission of a drug offense. 279 As cited in United States v.Bajakajian No. 96-1487 (1998): “Act of April, 30, 1790 ch. 9, §24, 1 Stat, 117 (“No conviction or judgment ….shall work corruption of blood, or any forfeiture of estate”).and reenacted this ban several times over the course of two centuries. See Rev. Stat §5826 (1875), Act of March. 4 1909, ch. 321, §341, 35 Stat, 1159: Act of June 25, 1948, ch. 645, §3563, 62 Stat. 837, codified at 18 U.S.C. §3563 (1982 ed.); repealed effective Nov. 1,1987, Pub. L. 98-473, 98 Stat.1987”.



until 1970 when Congress resurrected English Common law of punitive forfeiture as a tool to combat organized crime and drug trafficking as part of Organized Crime Control Act of 1970, and Comprehensive Drug Abuse Prevention and Control Act of 1970.280

It is important to note that the courts have continuously held that in rem proceedings have a remedial and non-punitive character. They do not constitute a punishment against an individual for an offense; its remedial purpose is to compensate the government for lost revenue.281

Forfeiture laws today have expanded to cover proceeds and instrumentalities of most federal criminal offenses, although the U.S. does not have a comprehensive forfeiture statute that covers proceeds and instrumentalities used or derived from any type of offense. Quite to the contrary, forfeiture provisions are scattered throughout numerous federal and state statutes. However, in rem forfeiture continues to be the primary forfeiture proceeding with an action instituted against the property and the innocence or guilt of the property owner remaining unimportant.

Asset Forfeiture Laws in the United States

Contrary to the existing practices in other countries, including the two that are the focus of this report—Australia and Ireland—the U.S. does not have a comprehensive forfeiture statute providing for forfeiture of property for all type of offenses. The closest the U.S. has come to enacting a comprehensive federal forfeiture statute is CAFRA of 2000, although other federal statutes continue to operate in parallel that provide for seizure and forfeiture of property constituting proceeds or instrumentalities of a crime. As Casella282 noted, “because the asset forfeiture laws in the United States developed piecemeal over a long period of time, they were not written in generic terms….Congress enacted different forfeiture provisions at different times for different offenses.” Civil asset forfeiture provisions are found in more than one hundred federal statutes including the: (a) Racketeering and Influenced and Corrupt Organizations Act (RICO)283 which authorizes the government to “forfeit any property and any interest the person has acquired or maintained in violation of section 1962, including interest in security, claims or property or contractual right of any kind”; (b) Comprehensive Drug Abuse Prevention and Control Act (1970)284 and subsequent amendments in 1978 and 1984, which broadened the reach of forfeiture, authorizing the government to forfeit all property used to commit a drug offense, to facilitate trade of narcotics, and facilitating property and proceeds derived from drug trade; (c) PATRIOT Act285 which authorizes the government to confiscate everything the wrongdoer owns, i.e., forfeiture of all assets of a person engaged in terrorism; (d) the Customs Act286 which orders

280See Organized Crime Control Act of 1970, 18 U.S.C. §1963, and Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. §848(a). In providing for this mode of punishment, which had long been used in this country, the Senate Judiciary Committee acknowledged that “criminal forfeiture….Represents an innovative attempt to call on our common law heritage to meet an essentially modern problem.” Senate Report Np. 91–617, p. 79 (1969). 281 See One Lot Emerald Cut Stones v. United States, 409 U.S. 232 91972)—noting that remedial action is action brought to obtain compensation or indemnity. 282 Stefan D. Casella Overview of Asset Forfeiture Law in the United States, January 2004 available at: http://works.bepress.com/stefan_cassella 283 18 U.S.C. 1963 (a) 284 Comprehensive Drug Abuse Prevention and Control Act of 1970, amended in 1984. 21 U.S.C § 881 authorized the government to demand forfeit of all controlled substances, raw materials, and equipment used to manufacture controlled substances, and all vehicles used to distribute controlled substances. In 1978, the reach of forfeiture provisions was expanded to cover all profits from the drug trade and all assets purchased with such proceeds. §881(a)(6), further in 1984 Congress added §881 (a)(7) authorizing forfeiture of all property used in any manner to facilitate a violation of drug laws. 285 18 U.S.C.§ 981(a)(1)(G) 28619 U.S.C



forfeiture of contraband goods and conveyances; and (e) CAFRA, which is described in more detail below.

Types of non- conviction based forfeiture

Summary forfeiture authorizes law enforcement to summarily make on-the-spot seizures of property to which no one claims ownership, without a requirement for a legal proceeding. Summary forfeiture is applied in cases of seizure of contraband goods where the ownership is vested with the law enforcement because no legal ownership can be claimed of property that is not legal, e.g., illegal narcotics.

Administrative forfeiture authorizes law enforcement to seize property during an investigation if there is probable cause to believe that the property is subject to forfeiture. Once the property is seized, law enforcement commences an administrative forfeiture and notices are sent to any person with an interest in the property and interested in contesting forfeiture within a prescribed period of time. If forfeiture of the property is not contested within the period prescribed by law, law enforcement can require forfeiture of the property by making a declaration of forfeiture that has the same force and effect as a judicial order. Under the CAFRA, the seizing agency must begin the forfeiture proceeding within a fixed period of time (60 days) and must give the owner sufficient time to file a claim. If the owner files a claim, law enforcement is required to refer the case to prosecution to institute a forfeiture proceeding. Administrative forfeitures are controversial because they begin with a summary seizure of property and any type of movable property that can be carried can be seized. To reclaim the property, the property owner is required to file a claim. However, these proceedings can be expensive in the case where a property owner is not legally educated and able to defend himself/herself in court and may or may not be able to afford a lawyer, shifting additional costs to the state. Administrative forfeitures constitute the vast majority if federal forfeitures because most forfeiters (85 percent) in drug cases are not contested.287

Civil Judicial Proceedings are used to institute forfeiture proceedings against real estate, i.e., immovable property. The government institutes in rem proceedings against the property itself and bears the burden to establish the civil standard of proof - preponderance of evidence - that the property is tainted. The government must successfully establish a substantial connection between the property subject to forfeiture and a specific offense.

Civil Asset Reform Forfeiture Act

The CAFRA288 of 2000 is a federal statute designed to provide a uniform procedure for federal civil forfeiture. It is the only comprehensive civil asset forfeiture law that has been enacted by Congress. It provides for seizure and subsequent forfeiture of the proceeds of a large number of federal offenses, including fraud, bribery, embezzlement, and theft. Further, it authorizes the government to seize and declare forfeited proceeds and instrumentalities of state offenses, including murder, kidnapping, gambling, arson, robbery, bribery, extortion, obscenity, and state drug trafficking. The CAFRA does not

287Cited by Stefan D. Cassella in Overview of Asset Forfeiture Law in the United States, January 2004. “Prior to the enactment of the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), the Drug Enforcement Administration (DEA) estimated that 85 percent of forfeitures in drug cases were uncontested, Since CAFRA which made it easier to contest a forfeiture action, the number of uncontested DEA cases may have dropped to 80 percent. Other seizing agencies report similar figures”. 28818 U.S.C. A. § 981



apply to forfeitures handled by the U.S. Customs Service or to forfeiture statutes enforced by the Internal Revenue Service.289

Before enactment of CAFRA, federal forfeiture statutes enabled the government and law enforcement to obtain forfeiture of property by showing probable cause that the property was used either to commit or facilitate a crime. Once the government was able to show probable cause, the burden shifted to the property owner, appearing at a hearing as a claimant, to show that the property was not used to commit an offense or it did not constitute the proceeds of crime. For example, 21 U.S.C. § 881(d) provides that the customs laws govern the procedure for forfeitures under § 881. 19. U.S.C. § 1615 (1992) establishes the burden of proof in such forfeiture actions:

In all suits or actions . . .brought for the forfeiture of any vessel, vehicle, aircraft, merchandise, or baggage seized under the provisions of any law relating to the collection of duties on imports or tonnage, where the property is claimed by any person, the burden of proof shall lie upon such claimant; and in all suits or actions brought for the recovery of the value of any vessel, vehicle, aircraft, merchandise, or baggage, because of violation of any such law, the burden of proof shall be upon the defendant: Provided, that probable cause shall be first shown for the institution of such suit or action, to be judged by the court.

In addition, federal statutes did not contain provisions for protecting the interests of innocent owners. The Supreme Court held in Dobbins’s Distillery v. United States,290 “that the Acts of Congress in question made no exception whatsoever whether the alleged aggression was with or without the co-operation of the owners.” In this case the distillery owner leased the property to the distillery operator. It was the distillery operator who allegedly acted to defraud the U.S. of its public revenue in violation of 15. Stat. 132. The U.S. sought the civil forfeiture of the distillery and all related real and personal property, which the circuit court ordered following a jury verdict in the U.S.’s favor. The distillery owner argued that he was unaware of the alleged fraud, and therefore, he should not have had to forfeit his property. Affirming the judgment, the Court held that it was not necessary that the distillery owner knew that the distillery operator was committing fraud on the public revenue in order to maintain the information of forfeiture. Thus, court ordered forfeiture of property stating that the action was not brought against the owner, but against the property.

Further, forfeiture statutes pre-CAFRA required that a claimant or a property owner file a bond of 10 percent of the total value of the property to protect the property from forfeiture. Meaning, that any property owner whose property was subject to forfeiture in order to file a claim to protect his property from forfeiture was required to file a bond. This request has been repealed by CAFRA and the claimants are no longer required to file any bonds. Finally, the statutes had no provisions for compensation for damages to the property while held in seizure and there were no provisions allowing recovery of legal costs and attorney’s fees. CAFRA also contains provisions that allow the respondent to file a petition for the release of property pending trial to avoid hardship, among other things the property owner will have to show that the property may be destroyed, damaged or lost if not returned to the owner.

289 Other exemptions include Tariff Act 1930, Federal Food, Drug, and Cosmetic Act, and Trading with the Enemy Act (18 U.S.C. Section 983(I)). 29096,U.S. 395 (1878)-



CAFRA was the result of a seven-year effort to reform the civil asset forfeiture laws291 to create a comprehensive and more just civil forfeiture procedure. The initiative to reform civil asset forfeiture was spearheaded by Rep. Henry J. Hyde, who proposed his bill in 1996–1997 with the Department of Justice presenting its counter-proposal. Hearings before the House of Representatives and the House Judicial Committee lasted four years until the CAFRA was enacted.292 The initiative to reform forfeiture statutes came from the public protest regarding what was considered harsh and unjust forfeiture statutes, depriving citizens of private property without due process. Although the criminal defense bar had been voicing concerns about forfeiture statutes, a new statute was not enacted until an increasing number of middle class citizens had become the target of forfeiture statutes293 and began voicing complaints to their representatives. Courts, including the Supreme Court, continued to uphold the constitutionality of the forfeiture statutes in numerous cases.294 These outcomes were harshly criticized by the media and wider public.295

Many of the more controversial features of the earlier laws were removed by the CAFRA, which placed the burden on the government to show that the property was an instrument or proceeds of an offense and no longer required the property owner to show that the property was not used or derived from an unlawful activity. Hearsay evidence is no longer admissible evidence in court; the CAFRA introduced a uniform “innocent owner” provision, which provides for recovery of attorney’s fees, provides for compensation of damages or loss of property, imposes new time limits on the government, and requires proof of substantial connection between the forfeited property and the underlying crime. Although the CAFRA has introduced other changes to the civil asset forfeiture statutes, we have highlighted the ones that are relevant to this report.296

4.2. Transferability Analysis—Implications of Adopting UWO in the United States

A number of features make UWOs a unique form of non-conviction based civil asset forfeiture. As shown throughout this report, the main features distinguishing UWOs from other non-conviction based asset forfeiture statutes are:(1) they can be instituted against any person if there are reasonable grounds to believe that the person owns or controls unexplained wealth; (2) they do not require establishment of the nexus between the property subject of the proceeding and a specific offense, or only require a minimal connection;297 (3) once the state establishes that the respondent owns or possesses unexplained wealth or property constituting proceeds of crime, the burden shifts to the property owner to establish the contrary;

291146 Cong. Rec. H@)$^ (daily ex. April 11, 2000) Statement of Rep. Hyde). 292 Stefan D. Casella The Civil Asset Forfeiture Reform Act of 2000, available at: http://works.bepress.com/stefan_cassella 293ABA Journal/October 1993, A Law Run Wild—identifying cases against whom forfeiture proceedings were instituted: 1) the owner of a landscaping service who paid cash for an airline ticket. The purchase led Nashville police to search his luggage and confiscate nearly $10,000 in cash. He could not post the bond and challenge the seizure, and as a result, was nearly driven out of business; 2) the owners of an air charter business were driven into bankruptcy when their plane was seized flying a man from Arkansas to California who allegedly carried drug money. 294United States v. Pearson Yacht Leasing Co.; Austin v. United States, Dobbins’s Distillery; Bennis v. United States, etc. 295 ABA Journal December/1995 and ABA Journal November/1993 296For more detailed information on the history of the Civil Asset Reform Forfeiture Act of 2000, see Civil Asset Reform Act of 2000 Stefan D. Casella. 297 UWO of WA and NT do not contain the requirement to show a nexus between an offense and the property, while the UWO of the Commonwealth requires that there is a nexus between the property and a specific indictable offense. Similarly, the Irish Proceeds of Crime Act does not have a requirement that the connection between the property and specific offense be established.



and (4) the proceedings are in personam proceedings, instituted against the property owner, or in the case of Ireland have in personam features.298

As noted earlier, the U.S. has had in rem non-conviction based forfeiture statutes since its inception, with the first forfeiture statute being enacted soon after the Constitution was adopted. Forfeiture statutes have evolved over time, their application broadened to cover proceeds and instrumentalities of a broad range of offenses, and their application increased. However, the U.S. civil asset forfeiture statutes differ from UWOs in that that they do not contain some of these key UWO features 1) reversal of the burden of proof to the respondent to justify lawful origin of property; 2) in peronam proceedings, whereby an action is brought against the person not the property; and 3) there is no requirement to show a substantial connection between an offense and property subject of forfeiture. Below we attempt to provide insight on where the U.S. stands or the key issues that U.S. would have to consider if it were to adopt a similar type of law.

In personam versus in rem forfeiture proceeding— One of the differentiating features of the UWO of Australia is that it is an in personam proceeding. A proceeding is instituted against the property owner or the person who is considered to be in effective control of the property. As noted earlier, the Irish UWO (Proceeds of Crime Act) is deemed to be an in rem proceeding, or against the property; however, the statute requires that to commence a forfeiture proceeding, the owner of the property must be identified making it an in personam proceeding in practice. Also, differing from the U.S. in rem proceedings, the key respondent in the case is the property owner and not the property itself, e.g., Criminal Asset Bureau v. Gilligan, or Mck. V. D.

Bringing an action against the respondent in accordance with Australian and Irish legislation enables the government to require forfeiture to the state of any part of the property that is allegedly unlawful or constitutes proceeds of crime, rather than targeting a specific piece of property. For example, if a person owns more wealth that he/she can lawfully explain, or it is believed that the person owns property constituting the proceeds of crime, the government, if successful, is able to obtain forfeiture to the state of the value of unlawful property, regardless of whether the person owns or controls the tainted property.

In personam non-conviction proceedings have long been accepted in Australia and no case has been brought to a court challenging the constitutionality of in personam proceedings or labeling them as punitive. In Ireland, although it is held that the PoCA is an in rem proceeding, the state has to identify the property owner, whose property is subject to forfeiture. The state can make an application for forfeiture without identifying the owner only in cases when the property owner has absconded or has died. This provision was challenged at the Supreme Court by the respondents, stating that it violates presumption of innocence. The High Court in Murphy v GM PB PC Ltd299 upheld the in rem character of forfeiture proceedings under PoCA, stating that

No one is charged with a criminal offense, there is no prosecutor, no offense is created, no sanctions are imposed and there is no mensrea. Court further held that forfeiture under the Proceeds of Crime Act is an in rem proceeding and held that forfeiture does not constitute a

298The O provisions of the WA, NT, and Commonwealth are in personam proceedings identified as such in the statute. The Irish PoCA, however, uses an in rem proceedings but the statute requires that the property owner be identified in the proceedings and the action is brought against him/her as the owner. 299 [1999] IEHC 5 (HC)



penalty or a punishment and that it is a measure imposed on the respondent, which aim is to restore or remedy the situation.

While the U.S. has an in personam criminal forfeiture scheme imposed against a defendant following conviction of an offense, it does not have an in personam non-conviction forfeiture proceeding at the federal level. However, at the state level in personam forfeiture does exist. New York State has an in personam non-conviction forfeiture statute whereby an action is brought against a person to forfeit property in a civil proceeding. NY State law is considered to be a hybrid system comprised of elements of both civil and criminal forfeiture. Because of its in personam character, the statute has a higher burden of proof that rests with the state, provides for limitations on damages, a requirement for proportionality and statutory authorizations for interest of justice dismissals. The Civil Law Practice and Rules 13-A300 provides more protections for the respondent than other in rem forfeiture statutes. The statute has been construed to reinforce the notion that forfeitures, even if in personam, are not punishment for double jeopardy purposes. Article 13-A states “forfeiture action shall be civil, remedial… and shall not be deemed to be a penalty or criminal forfeiture for any purpose….an action under this article is not a criminal proceeding.” These specific provisions have been incorporated into the statute to show that the statute is not punitive in nature. The New York state legislature specifically resorted to defining the statute as civil in nature because this definition has an implication in determining its constitutionality.

The U.S. Supreme Court has in numerous cases upheld the constitutionality of forfeiture statutes stating that civil forfeiture proceedings do not violate the Double Jeopardy Clause because they are in rem, directed against the property, rather than the person. In Helvering v. Mitchell,301 the U.S. Supreme Court held that civil forfeiture does not violate the Double Jeopardy Clause ruling that the criminal charge of tax evasion does not exclude civil assessment of a fine. Similarly, in U.S. v Ursery, the court stated that forfeiture is not a punishment for the criminal offense. The Court continued to state that—

We do not rest our conclusion in these cases upon the long-recognized fiction that forfeiture in rem punishes only malfeasant property rather than a particular person. That forfeiture is designated as civil by Congress and proceeds in rem establishes a presumption that it is not subject to double jeopardy.

The Court resorted to the two-part test applied in 89 Firearms302 to determine whether forfeiture would be deemed punitive for double jeopardy purposes. Nevertheless, where the "clearest proof" indicates that an in rem civil forfeiture is "so punitive either in purpose or effect" as to be equivalent to a criminal proceeding, that forfeiture may be subject to the Double Jeopardy Clause. Thus the New York statute has clearly identified the proceedings, although in personam, as civil in nature to avoid the Double jeopardy Clause.

Another successful argument invoking constitutional protection in non-conviction forfeiture laws is that property owners can be adversely affected by what happens to their property. However an argument countering this is that it has long established legal doctrine that if the property is of unlawful origin the owner does not have legitimate rights to it and therefore, the property is subject to forfeiture.

3002006 New York Code - Laws: Civil Practice Law and Rules: (1310 - 1352) Proceeds Of a Crime-forfeiture 301303 U.S. 391, 58 S. Ct. 630, 82 L.Ed. 302465 U.S. at 363



Reversed Burden of Proof

The Reversed burden of proof is not a new concept in U.S. legal doctrine or within the civil asset forfeiture statutes. As noted, before enactment of the CAFRA, forfeiture statutes contained provisions that reversed the burden of proof to fall on the claimant, the property owner, to show that the property was not used or derived from an unlawful offense. The government was required to make an initial showing of probable cause that the property was subject to forfeiture and then the burden shifted to the property owner to establish the property’s innocence and prove, by a preponderance of evidence, that the property was not subject to forfeiture. The reversed burden of proof in the U.S. has been uniformly upheld by U.S. courts for more than 200 years in a long stream of cases303, e.g.,in U.S. v Ursery, the court recognized that the statute shifts the burden of proof to the claimant, stating that:

19 U.S.C. §1615, which governs the burden of proof in forfeiture proceedings under §881 and §981 provides that once the Government has shown probable cause that the property is subject to forfeiture, then the “burden of proof shall lie upon the claimant.

Similarly, in United States v. 3639 2nd St304 the 8th Circuit Court held that:

It was incumbent upon the government to establish presence of probable cause. Probable cause in a forfeiture proceeding is a reasonable ground for belief of guilt, supported by less than prima facie evidence but more than mere suspicion….Once the initial showing has been made, the burden shifts to the party opposing forfeiture to demonstrate by a preponderance of the evidence that is not subject to forfeiture or that a defense to forfeiture is applicable.

Further, the constitutionality of the reversed burden of proof was challenged on the grounds that it violated the Fifth Amendment privilege against self-incrimination. The Supreme Court has held that the Fifth Amendment privilege may apply in some civil forfeiture proceedings but because of the civil character of such proceedings, it is difficult to determine the reach of constitutional protections.305 In Boyd v. United States, 116 U.S. 616, 634 (1886), the Supreme Court held that the forfeitures were of a quasi-criminal nature and within the privilege against self-incrimination. In this case, the Supreme Court reviewed whether the lower court erred in awarding judgment in favor of the federal government in a customs action for forfeiture where the appellant, an importer, was ordered to give incriminating evidence against himself pursuant to 18 Stat. 186, § 12 (1874). The appellant alleged that the law was an unconstitutional violation of the Fifth Amendment. The Supreme Court held that the lower court erred, granting a new trial to the appellant. However, in United States v. Riverband Farms Inc. 847 f.2d 553, 558 (9th Cir. 1988) the Court held that not all constitutional protections apply to civil forfeiture. Courts have held that while the Fourth Amendment applies to civil forfeiture proceedings, the Fifth Amendment

303United States v. Brock, 747 F 2d 761 (D.C. Cir. 1984), United States v. 4492 Livonia Rd. 889 Fd. 1258, 1267 (2d Cir. 1989)—in a forfeiture proceeding brought under §881, the burden is initially on the government to establish its right to forfeiture by probable cause, 906 F.2d 110, 111 (4th Cir. 1990)—“in a civil forfeiture proceeding….once the government has showed by probable cause that the property is subject to forfeiture, the burden shifts to the claimant to prove by a preponderance of evidence that the factual predicates for forfeiture have not been meet.” 304869 F.2d 1093, 1095 (8th Cir. 1989) 305 Christine Durkin ; Civil Forfeiture under Federal Narcotics Law, 24 Suffolk U. L. Rev. 705 1990 citing United States v. United States Coin & Currency, 401 U.S. 715, 721-22 (1971)



Double Jeopardy Clause does not apply because forfeiture is a civil proceeding and is not subject to the procedural rules of criminal sanction.306

This led to situations in which the government could force forfeiture of property if it had probable cause following a lawful arrest or search, and simply wait for the property owner to contest the proposed forfeiture. It was considered that the filing of a verified complaint was enough for the government to meet the burden in a forfeiture proceeding. The CAFRA, as stated earlier, revoked the reversed burden of proof, and under the new regime, the government is now required to show, by a preponderance of evidence, that the property is the proceeds, instrumentality, or facilitating property of an offense. It is important to note that the courts have upheld the constitutionality of the reversed burden of proof; however, it was public dissatisfaction with the operation of the reverse burden of proof that led to the legislative decision to revoke it.307

Interestingly, Title 19 of the U.S.C §1615 (customs laws) has and continues to contain a provision reversing the burden of proof to the property owner or the claimant to establish the “innocence” of the property. The §1615 provisions states:

In all suits or actions….brought for the forfeiture of any vessel, vehicle, aircraft, merchandise, or baggage seized under the provisions of any law relating to the collection of duties on imports or tonnage, where the property is claimed by any person, the burden of proof shall lie upon such claimant; and in all suits or actions brought for the recovery of the value of any vessel, vehicle, aircraft, merchandise, or baggage, because of violation of any such law, the burden of proof shall be upon the defendant; Provided, that probable cause shall be first shown for the institution of such suit or action, to be judged by the court….

Even proceedings that are clearly criminal in nature, the constitutionality of the reversed burden of proof in, in limited circumstances, has been upheld by the U.S. Supreme Court, noting that it is not unconstitutional to shift the burden of proving an affirmative defense to the defendant in a criminal case.308 In this case, the defendant was charged with second-degree murder under New York Penal Law§ 125.25 for killing his wife’s friend. After the defendant was convicted of murder, he appealed the verdict on the basis that the need to prove the affirmative defense of extreme emotional disturbance was a violation of the Fourteenth Amendment. The Court held that there was no violation of defendant’s due process rights because the defendant had the burden to prove the affirmative defense of extreme emotional disturbance by a preponderance of evidence after the state had to establish beyond reasonable doubt that the defendant had committed the crime of which he was charged before the burden shifted on him.309 This decision upholds the constitutionality of the reversal of the burden of proof to the defendant

306 See One Lot Emerald Cut Stones and One Ring v. United States, 409 U.S. 232, 235-37 (1972)—court held that forfeiture is not barred by double jeopardy clause because it is civil and remedial. 307 ABA Journal /October 1993—“ …government need show to justify a seizure is probable cause that the property is subject to forfeiture. Probable cause can be provided by hearsay evidence….. Then you must prove that the property is “innocent”. In essence, the standard is guilty until proven innocent” citing Henry Hyde (R-III);National Review, February 20 (1995)—Property can be seized on mere suspicion, and the burden is then on the owner to get it back. 308Patterson v. New York, 432 U.S. 197 (1977). 309 See Mullaney v. Wilbur, 421 U.S. 684, 697 (1975); in Re Winship, 397 U.S. 357, 364 (1970) noting that the government needs to prove beyond reasonable doubt every fact necessary to constitute a crime required to convict; Leland v. Oregon, 343, U.S. 790, 794 (1952) noting that the prosecution is required to prove beyond a reasonable doubt every element of crime charged. The court confirmed that it remained constitutional to burden the defendant with proving his insanity defense. In Morrison v. California, 288 U.S. 591 (1933), the court held that it did not violate the due process clause for the State to place on the defendant the

Comparati

Review of

for elemethe affirmproof—pr

The reverthe RevenRaleigh vburden ofwhere theDepartmeunpaid taxnotice of productioappellate

respondenproceedinan instrum

Although prepondermust meeevidence.”the far-rea

“burden of pan Oklahomconvincing defendant to310 528 U.S.311 In this cibankruptcy.revenue, thepowerful jua tax claim, 1073)—the

Standard

Ireland

Unde

Prob

In Pr

of pr

prob

outli

ve Analysis of

f U.S. System

ents that are mative defensreponderance

rsal of the burnue Code 26v. Illinois Depf proof on taxe substantive tent of Revenuxes after it wpenalty liabin and persuacourt held th

nt. But under ng but has to sment or proce

the statutoryrance of the eet is much hi” standard In aching and se

proving citizensh

ma law that presuevidence violateo prove his comp. 1151 (2000) ivil case, the Illin Several compel

e taxpayer's readstifications not tand its silence iSupreme Court

d of Proof, UW

er the Statute –

abilities

actice – A high

roof than balan

babilities stand

ned in Mck v. D

f Unexplained W

not necessaryse, and based

of evidence.

rden of proof 6 U.S.C. The partment of Rx claims remtax law puts iue discovere

was defunct aility against tasion to the rhat the burde

CAFRA the show by a preeds of a crime

y requirementevidence (balaigher, correspIreland, acco

erious effects

hip as a defense.umed a criminal ed the defendantpetence by a prep

nois tax law placlling rationales f

dier access to theto be disregardedndicates that no held that the bur

WOs –

– Balance of

her standard

nce of

ard as clearly

D

Wealth Orders

y for convictd on a lower

f is also permiU.S. Suprem

Revenue,310 hmained on theit. In this cased that a corp

and issued bothe debtor. Tresponsible ofen of proof

petitioneDepartmbankruptlaw, and

Of note the govpropertyrespondestatutes rcriminalthan a minstrume

government eponderance oe.

t in both Ausance of probaponding moreording to the r

forfeiture ca

.” In Cooper v. Odefendant comp’s Fourteenth Amponderance of e

ces the burden offor this shift were relevant informd lightly. The Bachange was inte

rden should have

s

tion, such as standard of

issible under me Court, in held that the e respondent, e, the Illinois poration had

oth a notice oThe Illinois tafficer once afor the tax c

er, the debtoment of Rev

tcy did not ad the Supreme

for the reversernment mu owner, as ent. Before erequired that proceeding,

mere suspicioentality of annot only bea

of evidence th

tralia and Ireabilities), in pe closely to trepresentativean have on the

Oklahoma 116 Spetent to stand trimendment right vidence is const

f proof on the ree listed by the co

mation, and the imankruptcy Code ended. Pp. 4-6. Ie been on the tax

f

of tax liabilityax law shiftea notice of peclaim in bankor’s trustee, venue. The alter the burde Court affirm

sed burden ofust meet bef

well as thenactment of the governmeprobable cau

on that the prn offense, bears the burdenhat the proper

eland for the practice the stathe U.S. stanes of the Crime property ow

S. Ct, 1373 *199ial unless he proto due process,

titutional.

esponsible officeourt—the governmportance of encmakes no provis

In United States xpayer.

Standard

Australia

Unde

proba

In Pra

evide

princ

y against the ed the burdenenalty liabilitkruptcy court

and ruled Appellate

den imposed med.311

f proof is thefore the burhe standard the CAFRA,

ent meet the luse, which wroperty constefore the burn of proof thrrty subject to

standard of pandard of prondard of “cleminal Asset Bwners, the CA

6), the U.S. Sup

oved his incompewhile a statute t

er, in this case thnment's vital intcouraging volunsion for altering v. Reach F.2d 1

d of Proof in U

er the Statute ‐

abilities

actice –– Clear

ence (a.k.a the

iple)

corporation n of proof boty was issuedt remained oin favor oCourt held by the substa

e standard of den shifts timposed on

, federal forflower standarwas slightly htituted proceeden shifted troughout the forfeiture is

proof is basedoof the governear and conviBureau, recognAB self-impo

preme Court heldetence by clear athat requires of th

he trustee overseterest in acquirinntary compliance

the burden of pr0(1st Cir. P.R.

UWOs ‐

‐ Balance of

and convincin

Briginshaw

161

and a oth on d. The on the of the

that antive

proof o the n the feiture rd of a higher eds or to the entire either

d on a nment incing nizing osed a

d that and he

eing ng its e —are roof on

ng



higher standard of proof than the one required by law. However, the High Court, in Mck v. D set a detailed seven-step process for evaluation of evidence brought by the CAB. Similarly, in Australia, the High Court has imposed a higher standard of proof on the government than that stated in the statute. This higher standard is known as the Briginshaw312 principle, whereby a standard of proof higher than preponderance of evidence is required of the government before the burden shifts to the property owner. The standard of proof the respondent bears is lower than the preponderance of evidence, with the justification that the state, with its large apparatus and resources, is better equipped to meet a higher standard compared with an individual whose access to resources may be limited. Thus the fact that the government must meet a higher standard of proof, and must show clear and convincing evidence that the person or property owner possesses property that constitutes unexplained wealth or proceeds of crime, may make the notion of the reverse burden of proof more acceptable. Both Irish and Australian courts have, in a long stream of cases, accepted that the reverse burden of proof in necessary in cases when the respondent is in the best position to explain lawfulness of his/her property.313

Nexus between an Offense and Property

As highlighted previously UWOs are a specific type of non-conviction asset forfeiture and therefore can be introduced separately from any other action. The UWOs in Australia and Ireland do not have a requirement to show a connection between the property subject to forfeiture and an offense. Conversely, under the U.S. forfeiture statutes, including CAFRA, there is a requirement to show a substantial connection between a specific offense and the property.

As discussed in sections 3.2.1.2 (WA) and 3.2.2 (Ireland) under the UWOs in both Australia and Ireland, the government is only required to show, on preponderance of evidence, that the property constitutes proceeds of crime or unexplained wealth, before the burden shifts to the respondent. Evidence supporting the affidavits must show that there are reasonable grounds to conclude the respondent has been engaged in criminal conduct. However the government is not required to show that the respondent has been engaged in the commission of a specific offense or show that the property subject to forfeiture is connected to a crime. This is substantially different from the civil forfeiture statutes of the U.S. because these set forth in rem proceedings; property is the subject of forfeiture because “guilt” is attached to it, it is an instrumentality of an offense, or property facilitating commission of an offense, or proceeds of a specific offense. Forfeiture is limited to the specific property involved in the crime; the government can only demand forfeiture of the actual property derived from or used to commit the offense (see United States v $ 8,221.877.16 in U.S. Currency 314). The government is required to trace the seized property directly to the offense giving rise to the forfeiture. In most of the cases, the connection between the offense and the property is substantial and easy to prove. Therefore, applying UWOs to the U.S. would require a significant change in this doctrine, shifting the proceeding such that the government is no longer required to show that the respondent has been engaged in the commission of a specific offense or show that the property subject to forfeiture is connected to a crime.

312Briginshaw v. Briginshaw (1938) 60 CLR 336. See also Section 3.2.1.7, Australian Case Law 313See Section.3.2.2.2, Irish Case Law; Giligan v. CAB [1997], Felix J. McKenna v. H and another; Australia, see Section 3.2.1.7 Australian Case Law and cases Dung v. DPP, DPP v. Morris. 314330 F3d 141 (3rd Cir. 2003)



Equitable Sharing

One of the biggest criticisms of the U.S. forfeiture laws is equitable sharing, raising concerns regarding the motives of law enforcement concerning forfeiture. Questions have been continuously raised regarding whether the primary motive of forfeiture actions is revenue generation or crime reduction. The most controversial state and federal laws have empowered law enforcement authorities not only to seize and forfeit assets but also to receive proceeds from such activities. Critics of asset forfeiture laws have argued that forfeiture laws encourage seizure of assets and not suppression of crime and that policing for profit has taken predominance over policing to fight crime, particularly on the state level.

The Psychotropic Substance Act of 1984 was amended to authorize law enforcement to keep the rewards of civil asset forfeiture. Before this 1984 amendment, assets were deposited with the U.S. Treasury, but thereafter, proceeds have been deposited directly into the Department of Justice Asset Forfeiture Fund and the Department of the Treasury’s Forfeiture Fund. State law enforcement agencies benefit from this arrangement as well. If the state laws are strict in that they do not allow law enforcement to reap the benefits of the forfeited assets, state and local officials can pursue so-called “adaptive“ forfeitures in which case they ask federal officials to handle the forfeiture action. If such a forfeiture action succeeds, state and local entities can receive up to 80 percent of what is ultimately forfeited.

Irish and Australian UWOs do not contain provisions on equitable sharing; proceeds resulting from forfeiture are transferred to the Exchequer in Ireland and to the Confiscation Crime Account in WA. Only recently, in 2008, has a decision been made in WA to transfer to law enforcement 15 percent of the proceeds recovered to support crime fighting objectives. Since this change is recent and UWOs are not that widely used in WA, it has not been raised as a concern or an issue by the wider public. Conversely, Ireland transfers all the funds to the Exchequer and no funds are received by law enforcement from the recovered funds. This in effect, is another point of departure relative to U.S. law. It appears that the public’s negative perception of OWOs (in the case of Australia and Ireland) is mitigated when statutes limit the amount of proceeds entitled to local law officials.

Other Issues to Be Considered

Information sharing—Cooperation and information sharing between law enforcement and revenue services is one of the key accomplishments of PoCA in Ireland. It is this multiagency approach that brought powers of several agencies under an umbrella of one agency, enabling cooperation, coordination, and exchange of information. This approach is not entirely alien to the U.S. The Organized Crime Strike Forces established under Attorney General Kennedy, and which operated separately from U.S. Attorney’s Offices until the late 1980’s, are a close analogy to the CAB. Therefore, were the U.S. to apply UWOs, there is precedent of a CAB type agency. This is quite notable considering that the CAB is attributed as the primary reason for the success of the Irish UWO, even held as a model and objective to attain in Australia. However, in the U.S. a controversial issue would be the sharing of information between the law enforcement agencies and the revenue services.

Property/asset substitution or payment of an amount equivalent to the value of unexplained wealth. The Australian and Irish statutes also provide for property asset/property substitution. When a court concludes that the person owns or possesses unexplained wealth, the owner can make a payment to the government equivalent to the amount of unexplained wealth. Thus in cases when the constituting the proceeds of crime has been consumed or discarded and is no longer available for forfeiture, in those cases



the court can either order the respondent to pay an equivalent to the amount of the original property or forfeit another property. No such provision exists in the U.S. civil forfeiture statute because the action is brought against the property, and if the property is no longer available, if it is disposed or dissipated, the prosecution cannot bring any case. This tends to happen in cases where the proceeds of crime are cash or money derived from a fraud or drug offense. The only solution in these cases is that cash and electronic funds are considered fungible for one year after the offense is committed (United States v. U.S. Currency Deposited in Account No 1115000763247 For Active Trade Company, 176 F3d 941 (7th Cir. 1999)). Once the government has established a probable cause to believe that the amount of money laundered through a bank account in the past year exceeds the balance in the account at the time of seizure, the entire balance is subject to forfeiture under S 20984. In some cases where the statute stipulates, it is unnecessary for the government to comply with the strict tracing requirements that otherwise govern civil forfeiture cases. In United States v Douglas, 55 F3d 584 (11th Cir. 1995), the government’s position in obtaining a preliminary order of forfeiture was not substantially justified where the government failed to take notice that property had been awarded to third party in an action enforcing civil judgment. If the U.S. was to enact UWOs it is of ultimate importance to consider provisions providing for forfeiture of substitute property or payment of an equivalent amount of money to the amount of unexplained wealth.

Notice Requirements In United States v James Daniel Good Real Property,315 the court held “the seizure of real property…is not one of those extraordinary instances that justify the postponement of notice and hearing. Unless exigent circumstances are present, the Due Process Clause requires the Government to afford notice and a meaningful opportunity to be heard before seizing real property subject to civil forfeiture.” Prior to James Daniel Good, the Supreme Court held that the government could seize property without giving notice to property owners that such action was imminent (Colero-Toledo v Pearson Yacht Leasing Co., 1974). This does not mean that notice has to be given in all cases. When it is a matter of cash, the state can seize cash without notifying a person that his or her assets will be seized, if such notification would cause money to dissipate or disappear. However, courts have held that the government cannot always seize cash without proper notification. In United States v. $506,231 in U.S. Currency (1997, p. 442), the 7th Circuit severely criticized the Chicago police and the U.S. government officials’ attempt to forfeit half a million dollars in cash, based on the assumption that most people do not carry such large amounts of cash. In the court’s words:

As has likely been obvious from the tone of this opinion, we believe the government’s conduct in forfeiture cases leaves much to be desired. We are certainly not the first court to be enormously troubled by the government’s increasing and virtually unchecked use of the civil forfeiture statutes and the disregard for the due process that is buried in those statutes.

Under UWOs in Australia and Ireland, cash and any other property can be seized within a short period of time (48-72 hours) until an application for a freezing order is made. Application for a freezing order is made ex parte and the statute requires that a notice be sent to the parties as soon as practicable. In addition, only movable property such as cash, cars, etc. are seized while for other property an application for a freezing order and a subsequent notice is required. If U.S. is to enact UWOs it has to include provisions on timely notification of all parties of seizure and restrain of property.

315 United States v. James Daniel Good Real Property, (1993) p.62



Admissibility of Hearsay Evidence

It is also relevant to note that Ireland and Australia statutes provide that hearsay evidence is admissible evidence in court. Frequently, UWOs cases are initiated on the grounds of hearsay evidence stated in an affidavit by an authorized officer and further supported by witnesses. Admissibility of hearsay evidence has been upheld by both the Australian and the Irish Supreme Courts. Prior to CAFRA this was also true in the U.S., however the CAFRA makes hearsay evidence no longer acceptable.

Applicability of the lessons learned in Australia and Ireland to the U.S.

The need for UWO-type laws that enable the state to deprive criminals of their ill-gotten assets has been long recognized. Yet, few countries have ventured in that direction, while many more expressed increased caution, fearing the response of the courts, legislators and the wider public. As relatively new laws, very little data has been collected to date to prove their effectiveness and substantiate claims of their power and effectiveness in fighting and deterring crime. However, the study team concluded that they can be effective if they are used appropriately and judiciously. In other words the government has to carefully target the UWO. In addition, the establishment of a task force similar to the CAB with broad powers allowing share of information between different agencies is a crucial element to successful UWOs. They can bolster the state’s ability to combat organized and serious crime.

In contrast with Ireland and Australia that have comprehensive and unified conviction and non-conviction based forfeiture regimes in place, U.S forfeiture laws are many, target all sorts of property used in, or derived from various offenses, can be applied to different offenses, and are scattered through different federal statutes and state laws. Ireland and Australia had an advantage when they enacted UWOs as they did not have a multitude of other laws in place and were able to build a non-conviction based legislation applicable to all offenses. In considering whether to enact UWOs, the U.S. would have to demonstrate more caution as it already has a multitude of non-conviction forfeiture schemes in place, and introducing a UWO applicable to all offenses would be overambitious and ineffective. In this regard, U.S. policy makers have to identify the specific type of organized or serious crime offenses that they could be applied to, for example money laundering offenses, as the existing laws require a predicate offense before laundered proceeds can be forfeited. However, crucial to this effort is identifying a specific type of serious and organized crime offense which would justify adoption of such radical legislation.

The forfeiture laws the U.S. has in place have essential differences from UWOs, notably they do not provide for the reversal of the burden of proof (except in the revenue and customs offenses), they do have the requirement to show a substantial connection between the property and a predicate offense, and lastly a forfeiture proceeding is brought against the property, not the property owner.

Fundamental elements that make UWOs powerful and compelling are the ability to forfeit property without the need to identify a particular crime and to reverse the burden of proof to the respondent to justify the legitimacy of the property. Both these features have proved to be crucial in bringing and successfully concluding UWO application. For example even in the case of the infamous John Gilligan who has been convicted of numerous offenses, including drug dealing, without the Irish UWOs (PoCA) it would have been difficult to forfeit his property due to his ability to launder the proceeds and re-invest them in other businesses. This UWO law has allowed the state to target all of his property proving on balance of probability that it has derived from some criminal activity and not from specific offenses. Reversing the burden of proof on the respondent has in this case eased government’s burden to show a



connection between each property and offense, shifting the burden to the respondent to show that the property was acquired lawfully. In this case he failed to show any legitimate source of income and as a result lost most of his property. This is only to illustrate that without these elements the UWOs are unworkable and will not produce the intended results.

Another crucial element that has made Irish PoCA successful is the CAB and the excellent coordination it has achieved to establish between various agencies involved in the implementation of the law such as tax, revenue, customs and law enforcement. While co-location is important, it is not necessary to have effective coordination in place. Agreements between different agencies on share of information and intelligence are essential to make the Act workable and successful. The Irish model is being followed by the Australian federal government, who is in the process of convening a task force with similar powers. This concept is also not new to the U.S as there are numerous task forces that have been created to fight specific types of crime and would be key for successful implementation of UWOs.

If the UWO laws are to be enacted in the U.S., legislators will need to determine the level of evidence that will be required to show that a person owns or possesses unexplained wealth. As discussed earlier while the unexplained wealth laws do not have a requirement to show that any offense was committed, both Australia and Ireland have opted to show that there are reasonable suspicions to believe that the person has been engaged in some criminal activity. In this regard, acceptance of hearsay evidence is essential. Thus instead of showing a predicate offense they show a predicate criminal conduct. If the U.S. contemplates enactment of a similar law, the legislation must ensure that the linkage between property and specifically, individual crime is not required to be proved. However, it would be sensible to include a requirement to show that there are reasonable suspicions that the person has been engaged in criminal conduct. This would be a substantially lower burden of proof then showing a predicate offense. Yet this will assist in thwarting possible criticism that the law can be used against innocent citizens and silence the voices about the potential abuse by law enforcement. For UWOs to be effective, they must also be capable of also dealing with the proceeds of crime which have been co-mingled with other lawful assets, or transferred to other people, or have changed form. The Australian model provides that property owned or effectively controlled by the respondent is subject to forfeiture, enabling the state to forfeit property that effectively owned by the respondent, but whose legal ownership has been transferred to a third party, including family members.

Similarly, the burden of proof required to show that the person owns or possess unexplained wealth can be set to a higher threshold of a civil standard of proof of clear and convincing evidence. This may satisfy critics of the law by showing that only those clearly engaged in criminal activities will be targeted with this legislation. The downside is that it will raise the burden on the government to show that a person has engaged in some criminal activity to the extent it may make cases unworkable. However, the Irish, and to some extent the Australian UWOs, have shown that using a higher threshold of proof have helped in concluding more cases and establishing a trustworthy reputation with the courts and the public.

Although the issues of the reversal of the burden of proof is an issue that has been widely criticized in the U.S., to the point that it was revoked with the CAFRA in 2002, if it used only for specific type of serious and organized crime cases which are selected appropriately, it might be acceptable to the wider public. Safeguards need to be built in the law, including a judicious screening process of cases in order to convince law-makers and critics that it will be used only in meritorious cases, where there is convincing



evidence that wealth has been acquired illegally. This, coupled with a higher burden of proof on the side of the state, create sufficient safeguards to prevent potential abuse of the law in the future and provide sufficient protection for innocent citizens and third parties. Also, the practice in Ireland and Australia has shown that the reversal of the burden of proof is less controversial and not as harsh as it is thought to be. First, for the burden of proof to shift onto the respondent the state must meet its initial burden, known in Ireland as the evidentiary burden of proof. As the team has witnessed, both in Ireland and in Australia, the effective or practiced evidentiary burden of proof the state must meet is higher that the statutes require. Reversed burden of proof has been also upheld by the courts on the grounds that the property owner is in the best position and is the only person with access to information to show legitimacy and origin of the property.

A general lesson learned applicable to the U.S. and for that matter to any other country, is careful selection of cases. The CAB has established a stellar reputation with the Irish public and gained the trust of the judiciary and the broader government by only going after those individuals that have been engaged in criminal activities.

In summary, the reversed burden of proof in civil forfeiture proceedings has existed for two centuries in the U.S., in personam proceedings have been applied in the state of New York with no major controversy, and instrumentalities and proceeds of crime have been the subject of forfeiture proceedings for a long time, surviving constitutional challenges. However, two concepts are novel and would be innovations to the U.S. statutes—the unexplained wealth concept and the lack of a requirement to show a nexus between an offense and the property. If the U.S. were to consider enactment of a similar statute, it would have to resolve these issues to the satisfaction of reviewing courts. Also, modeling the law after a statute that is less controversial and far-reaching such as the Australian Commonwealth UWO, that provides greater forfeiture protections to the respondents and innocent property owners, has a requirement to show a nexus between an offense and the property and gives courts the authority to dismiss cases on the grounds that they are unjust.

Unexplained wealth laws, authorizing forfeiture of property acquired through unlawful activities, were introduced as a result of extraordinary events, the increase in crime and drug trafficking in the Irish and Australian societies. Additionally, in Ireland, the law was introduced following the murder of two public personas that outraged the entire society. Collective shock created a unified and conducive environment to enact a far reaching law that would have otherwise been unacceptable, without generating massive dissatisfaction and major opposition. On the contrary, the Australian and Irish citizenry as a whole are supportive and in favor of the law. Thus when enacting UWOs, one of the most important objectives should be its justification and linkage to solving real or perceived needs in society.

We have attempted to highlight some of the main issues which have arisen during our study, draw on the lessons learned from Australia and Ireland as possible options for the U.S. policymakers considering introduction of UWO legislation. With the federal government of Australia beginning the application of its new UWO law, these options may either expand in number or, alternatively, become more refined. Continuous evaluation of the various models can be anticipated. As Freiberg noted, forfeiture laws have been “introduced, amended, adjusted, reviewed, reinforced, enhanced and, in some cases, repealed and then re-legislated.”316 Unexplained Wealth Order laws are likely to follow the same winding road.

316 Anthon Kennedy “ Designing a civil forfeiture system; an issues list for policymakers and legislators”, J. of Fin. Crime; 2006: 13, 2; p.132

comparative evaluation of unexplained wealth orders - national

Documents